Following the unveiling of the Office of the Board of Investment of Thailand’s (BOI) new Seven-Year Investment Promotion Strategy (2015 – 2021), the Thai Cabinet has recently given in-principle approval to a range of amendments to the Investment Promotion Act BE 2520 (Act). The amendment is the first revision to the Act in more than 10 years. The BOI was of the view that the existing provisions did not offer sufficient incentives for investors and that the Act should be updated in order to enhance Thailand’s competitiveness.
The BOI consequently proposed an amendment to the Act for the consideration of the Thai Cabinet on 15 September 2015. The key changes include:
- Board member(s) or adviser(s) of the BOI who have already completed their term will be able to maintain their position until a replacement is appointed by the Thai government, but such extended tenure shall not exceed 120 days in duration.
- The BOI will have authority to assign a third party to act on their behalf for certain activities, such as investigation of machinery, raw materials and other essentials in order to better facilitate the private sector.
- Added BOI conditions to promote investment in accordance with World Trade Organization’s (WTO) conditions, such as the cancellation of manufacturing activities carried out exclusively for export, enforcement of domestic raw material and export subsidies that are in violation of WTO rules.
- Rights and benefits to support research and development (R&D), including import duty exemptions for BOI-approved machinery specifically used for R&D, in addition to the privileges provided under the existing law.
- Corporate income tax exemptions for a period not exceeding 13 years for projects using high-end technology, advanced innovation or R&D.
- Capability to deduct the amount spent on a promoted project from net profits, not exceeding 90 percent of actual investment.
- Extension of the dividend payment period in order to help shareholders in the event that a promoted person could not pay dividends in a timely period within the corporate income tax exemption period obtained. The dividend payment period has thus been extended six months from the end of the tax holiday period.
The amendments are now in the process of being drafted at the Council of State and are subject to further change. It is likely to be another six months before they come into effect.
Senior Legal Adviser
* The information contained in this legal update is provided for information purposes only, and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.