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Tax – BOI
Thailand is set to become the main hub in Southeast Asia for the production of electric vehicles with new tax incentives
26/10/2021
There has been a dramatic shift in the worldwide car manufacturing industry towards the development and building of electric cars. Numerous countries have already announced their aim to move to the full use of electric vehicles within the next 10 to 15 years. In order to stay ahead of the trend, Thailand has released new incentives to remain a leading hub for the automotive industries.
Having already positioned itself as Southeast Asia’s leading car production hub, Thailand has now turned its attention to becoming a hub for battery-powered/electric vehicles. Thailand has set a target to produce 1.2 million electric vehicles a year by 2036. To facilitate this, on the 4th November 2020, the Board of Investment (BOI) announced the reintroduction of investment promotions for the development and production of electric vehicles in Thailand. These proposals will replace the previous set of incentives that expired in 2018.
These ambitious targets, combined with the incentives on offer from the BOI make Thailand the perfect destination for companies looking to tap into the electric vehicles and battery markets.
Why is Thailand attractive for the production of electric vehicles?
Thailand already boasts a highly developed infrastructure to assist companies looking to establish their business here. With a highly skilled labour force available and an easily accessible supply chain, Thailand has become a highly attractive option for companies. Furthermore, Thailand has also developed a booming local automotive market as well, with a clear increase in the number of electric vehicles being sold.
What are the incentives / benefits offered to companies who succeed in obtaining a BOI promotion?
The existing infrastructure isn’t the only perk of establishing your company in Thailand. As mentioned above, Thailand’s Board of Investment has released some special incentives aimed at attracting companies to Thailand for the purpose of developing electric vehicles.
It is important to note that these BOI incentives are in addition to the normal perks that come with a BOI promotion. Please see below for a breakdown of all incentives available for eligible companies below.
BOI incentives
All BOI promotions come with a unique set of advantages that can be hugely beneficial for any company. The main advantages are as follows:
- 100% foreign ownership: BOI promotions are one of the best ways to achieve a fully foreign owned business entity in Thailand.
- Ease of hiring foreign employees: BOI promotions are not subject to the same restrictions for hiring foreign employees as other company structures in Thailand. For example, limited companies are required to hire 4 Thai staff and have a minimum capital requirement of 2 Million THB (1 Million THB for prospective employees married to a Thai national) per 1 foreign employee hired.
- Tax incentives: Companies who participate in certain business activities are eligible for a Corporate Income Tax exemption.
Specific BOI incentives related to the production of Electric Vehicles
The BOI is offering tax holidays of up to eight years, along with the following concessions, for companies that establish a company for the purpose of electric vehicle production in Thailand.
- Four-wheel vehicle manufacturers (with a minimum investment of 5 Billion THB) are eligible for an 8 year tax holiday.
- Those companies who invest less than 5 Billion THB are eligible for a 3 year tax holiday.
- Companies who produce motorcycles, three-wheeled vehicles, buses and trucks will be eligible for a three-year corporate income tax exemption.
- Manufacturers of electric-powered ships with less than 500 gross tonnage are eligible for an 8 year corporate income tax waiver.
- Companies developing critical parts e.g. high-voltage harness, reduction gear, battery cooling system and regenerative braking systems, are eligible for an 8 year corporate tax exemption.
- Companies producing battery modules and cells for the local Thai market will get a 90% reduction on import duties for 2 years on raw or essential materials (which are not available in Thailand).
Conclusion
Applying for a BOI Promotion should always be the first option considered when opening a company in Thailand. BOI promoted companies are eligible for significant benefits which could play an important part in the development of a company. The additional incentives offered by the BOI for the development of Electric Vehicles and certain related components makes now a perfect time to set up your company in Thailand.
To see how our team experts, who specialise in BOI applications can help your company obtain promotion, please follow this link.
Please note that this article is for information purposes only and does not constitute legal advice.
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