19 September Thailand launches New Incentives Package to Boost Investment
On September 6, 2019, Thailand’s economic ministers endorsed a new investment promotion package recommended by the Board of Investment (BOI) to enhance the country’s ability to attract foreign investment and encourage foreign investors seeking to relocate operations in order to escape the impact of the ongoing US-China trade war.
The “Thailand Plus” campaign covers four main investment-related areas:
* Tax incentives. There will be an additional five-year, 50% reduction of corporate income tax (CIT) for investment projects that have an actual value of at least THB 1 billion by December 2021, and that submit an application for BOI promotion before the end of 2020.
* Improved regulatory efficiency. A new committee will be set up to propel and coordinate investment in Thailand—similar to the One Stop Service, and chaired by the prime minister. The committee will work to facilitate investment activity and resolve any problems that might arise. It will also empower the BOI office to approve investment projects that are not entitled to CIT benefits—regardless of project size—in order to expedite responses to demands from investors who wish to quickly relocate their investments.
* Manpower development. Business operators who provide training for advanced technology will be allowed to include these expenses as a tax allowance over two years (2019–2020). Similarly, business operators that hire highly skilled labor in the areas of science, technology, and advanced engineering will be able to include these related wages as deductible expenses during the same period. For BOI promoted projects for which CIT benefits are still valid, the BOI may allow training expenses relating to advanced technology to be calculated together with the cap amount for CIT exemption, possibly up to 200 percent.
* Developing further measures. A number of agencies have been instructed to plan additional measures:
a) The Ministry of Commerce (MOC) is instructed to review and amend the list of restricted businesses attached to the Foreign Business Act B.E. 2542 (1999), as well as other laws that restrict investment in targeted industries. The BOI and relevant agencies (such as the Department of Industrial Works, Customs Department, Department of Land, and Revenue Department) are instructed to share information to expedite investment-related procedures, including by improving visa and work permit regulations for highly skilled foreign workers.
b) The Industrial Estate Authority of Thailand is instructed to prepare land for use specifically by foreign investors who wish to relocate business operations to Thailand.
c) The MOC is further instructed to summarize their findings and the relevant steps for restarting negotiations for the Thailand-EU trade agreement, and for entering into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) within 2019. They are also instructed to request the Budget Bureau to allocate funds for compensation to businesses impacted by these free trade agreements.
d) The Ministry of Finance is instructed to support investments in automation systems with further deductions during 2019–2020.
These investment promotion measures provide a significant improvement to the ease of doing business in Thailand for foreign investors, and are likely to be of continuing interest to those affected by the economic tension between China and the US. For more information on these measures, or on any other matters related to foreign investment in Thailand, please contact Napat Siri-armart at [email protected] or +66 2056 5537.