Thai Law – The Investment Promotion Act B.E. 2520 (1977)

Explained for Foreign Investors

Overview

The Investment Promotion Act B.E. 2520 (1977) is Thailand’s key legislation designed to encourage domestic and foreign investment by offering various incentives and benefits to businesses that contribute to the development of Thailand’s economy. The law established the Board of Investment (BOI), which is the main government agency responsible for implementing the Act and evaluating applications for investment promotion.

The Act aims to attract investments that:

• Contribute to national economic development.
• Transfer technology and knowledge to Thai nationals.
• Create employment for Thai workers.
• Promote regional development, innovation, and sustainability.

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Key Objectives

The primary goals of the Investment Promotion Act are to:

1. Promote economic growth through targeted industries.
2. Encourage investment in sectors that enhance Thailand’s competitiveness.
3. Support regional development by encouraging investment outside of Bangkok.
4. Foster the development of technology and innovation.

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Eligible Activities for Promotion

The BOI regularly updates the list of promoted industries that qualify for investment incentives. These industries often include:

• Advanced manufacturing
• Technology and innovation
• Tourism and hospitality
• Renewable energy
• Healthcare and biotechnology
• Logistics and infrastructure

Foreign investors whose projects fall into these categories can apply for investment promotion privileges under this Act.

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Key Incentives Offered

Businesses that are granted investment promotion privileges under the Investment Promotion Act receive a range of benefits, including:

1. Tax Incentives

• Corporate Income Tax Exemptions: Up to 8 years, depending on the activity and location.
• Exemption or Reduction of Import Duties: On machinery, raw materials, and essential supplies.
• Double Deductions for Infrastructure Costs: Such as utility expenses and construction of public utilities.

2. Non-Tax Incentives

• Permission for 100% Foreign Ownership: Even in sectors normally restricted under the Foreign Business Act.
• Land Ownership Rights: Normally restricted for foreign investors, but BOI-promoted companies can own land for their projects.
• Facilitated Work Permits and Visas: For foreign experts, skilled workers, and executives.
• Permission to remit foreign currency abroad.

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Application Process

Foreign and Thai businesses seeking investment promotion must follow these steps:

1. Prepare a Business Plan

• Outline the project scope, investment amount, technology, environmental impact, and economic benefits.
• The plan must demonstrate how the project contributes to Thailand’s development.

2. Submit Application to the BOI

• Applications are submitted to the Office of the Board of Investment.
• The application will be reviewed based on:
  • Type of industry.
  • Level of technology.
  • Potential economic and social contributions.
  • Environmental sustainability.

3. BOI Review and Approval

• BOI reviews the application and may request additional information or clarifications.
• Approved projects will receive an Investment Promotion Certificate, which lists all the incentives and conditions granted.

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Obligations of Promoted Companies

Businesses receiving BOI promotion must:

• Comply with the conditions set by the BOI.
• Maintain proper reporting on operations and investments.
• Ensure environmental and social responsibility.
• Meet hiring and technology transfer requirements, if applicable.

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Regional Incentives and Special Zones

The Act also allows the BOI to offer enhanced incentives for businesses investing in:

• Less-developed provinces to encourage regional economic balance.
• Special Economic Zones (SEZs) or Industrial Estates designed for targeted industries.

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Key Advantages for Foreign Investors

• Ability to own 100% of the business even in restricted sectors.
• Exemption from many requirements under the Foreign Business Act.
• Direct access to incentives that significantly reduce the cost of doing business.
• Enhanced ease of doing business, especially for large-scale or high-tech projects.

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Conclusion

The Investment Promotion Act B.E. 2520 (1977) serves as a critical tool for Thailand to attract foreign investment and stimulate economic growth. For foreign investors, receiving BOI promotion offers both financial advantages and regulatory benefits, making it an essential option to consider when establishing a business in Thailand.

If you are interested in applying for investment promotion or want advice on maximizing your benefits under this Act, our team is ready to assist you.