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BOI Company Formation in Thailand
20/06/2023
When establishing a company in Thailand, it is highly recommended to consider applying for a promotion from the Board of Investment (BOI). As a dedicated government agency, the BOI aims to attract foreign investment by offering exclusive incentives and benefits that regular companies cannot access. These advantages include tax exemptions, streamlined visa processes, infrastructure support, and more. By securing a BOI promotion, entrepreneurs can fast-track their entry into the Thai market and create a favorable business environment.
This blog post will explore the BOI and the process for obtaining a BOI promotion.
Key points
- Tax benefits such as income tax exemptions for a fixed period.
- 100% foreign ownership.
- Reduced requirements for supporting work permits i.e., no quotas for hiring foreigners.
- The ability to own land.
Why should entrepreneurs consider a BOI promotion in Thailand?
As mentioned above, companies approved for a BOI promotion are eligible for special incentives. It is important to note the tax incentives are dependent on which BOI promotion the company obtains. Therefore, not all BOI promotions are eligible for tax incentives.
These BOI incentives could significantly benefit foreign companies looking to establish a presence in Thailand.
Incentives available include:
100% foreign ownership
Depending on the business’s activities, foreign ownership of a regular Thai Limited company would be limited to 49.9%. This limitation is due to the Foreign Business Act and its restrictions on foreign-owned companies from undertaking certain business activities. For more information about this, please take a look at this article.
BOI-promoted companies are not subject to these restrictions and can be 100% foreign-owned.
BOI companies and the Foreign Business Act
Companies that receive a BOI promotion will be granted a Foreign Business Certificate. The FBA restricts foreigners or foreign-owned companies from undertaking over 50 categories of business activities in Thailand; however, having a Foreign Business Certificate removes this restriction, and the company can undertake such activities.
Foreign Business Certificates will be granted to all companies that receive a promotion from the BOI. This is a significant benefit as it removes many barriers to business in Thailand.
More information on the Foreign Business Act can be found here.
The reduced quota for hiring foreign employees
Unlike other company structures, BOI-promoted companies are not subject to any quotas when hiring foreign skilled employees. For example, Thai Limited Companies cannot hire a foreign employee unless the following quotas are satisfied:
- A ratio of 4:1 Thai to foreign employees. Essentially, there must be 4 Thai employees employed by the company per 1 foreign employee.
Removing this quota removes a massive barrier to employing foreign staff and is a huge advantage to a BOI promotion.
Other non-tax incentives:
- Permit to own land
- Streamlined visa and work permit processes
- Permit to remit money abroad in foreign currency
- The BOI will also announce a wide range of additional and often time-sensitive incentives for companies already operating under a BOI license.
Tax Incentives:
- Exemption or reduction of import duties
- Exemption of a juristic person’s income tax and dividends
- Double deductions from the costs of transportation, electricity, and water supply
- Eight-year corporate income tax exemption for:
- Knowledge-based activities focussing on R&D and design to enhance Thailand’s competitiveness, or
- Activities in infrastructure for Thailand’s development, or
- Activities using advanced technology to create value-added
- Five-year corporate income tax exemption for:
- High-technology activities are important to Thailand’s development, with few investments already existing here.
- Three-year corporate income tax exemption for:
- Activities with lower technology than above add value to domestic resources and supply-chain.
Who can apply for a BOI promotion?
Various types of companies can apply for a BOI promotion in Thailand. The BOI promotes investment in specific target sectors, including manufacturing, technology, research and development, tourism, agriculture, and renewable energy. Eligibility criteria and incentives may vary depending on the sector and the specific activities conducted by the company.
The following sections are the areas in which companies may be eligible to receive a promotion:
Section 1: Agriculture, Food, and Biotechnology Industry
Section 2: Medical Industry
Section 3: Machinery and Vehicles Industry
Section 4: Electrical Appliances and Electronics Industry
Section 5: Metal and Material Industry
Section 6: Chemical and Petrochemical Industry
Section 7: Public Utilities
Section 8: Digital Industry
What is the process for registering a BOI company in Thailand?
1) Feasibility Study
A business feasibility study enables companies to assess a BOI application’s viability and chances of success.
The feasibility study is an important process as it could save the client time and effort in the long run. Belaws BOI experts are available to help you undertake a business feasibility check. For more information, please click here.
Timeline: 3 business days
2) BOI application and interview process
As part of the application process, companies must submit application forms relating to the company’s specific business category.
Information required by the BOI includes:
- The total amount of registered capital and how the company will provide this capital.
- Information on the company’s project
- Employee details e.g. the number of foreign and Thai employees the company anticipates hiring
- Information regarding the management team’s skills and experience
- Estimated earnings and expenses of the company for its initial three years
Once the application is submitted, a BOI officer will review it and often ask for complementary information. The BOI Officer notably checks that the numbers input in the business plan match and make economic sense. The back and forth can continue until the BOI officer is satisfied with the complementary answers (from 2 to more than 10 for complex projects with high capital investment).
Following the application acceptance, a meeting is convened at the BOI office with the applicant to present the project. The meeting usually takes around one hour.
Following the meeting, the BOI officer will present the project at the next BOI Officer meeting for approval. Some applications get approved quickly and some others get dragged with additional questions that can’t delay the acceptance of some projects up to one year when the BOI application has not been well structured.
Timeline: 3 to 5 months
3) BOI approval and acceptance of Terms
The BOI offices will notify the applicant in writing their decisions within 7 days. This notification will outline the criteria of approval, BOI privileges, and perks awarded to the applicant. The applicant has 30 days to accept or not the conditions of the BOI. If the applicant does not respond within 30 days, they must send a letter of clarification to the BOI explaining why they missed the deadline (extensions of 30 days may be granted up to 3 times at the BOI’s discretion).
Timeline: 1 month
4) BOI Company Registration in Thailand and BOI License
After approval for acquiring a BOI promotion, a limited company must be registered in Thailand within six months of acceptance approval. Please note that if the applicant has already incorporated a company in Thailand, this company can be used for the BOI promotion. To do so, the company’s capital must be increased to the amount requested by the BOI for its promotion. The funds used to increase the capital must be transferred from abroad. The company will also be required to show proof of the capital transfer from abroad all the relevant and updated documents listed below.
To obtain the BOI License, the following documents, the applicant will have to submit the following documents:
- Application form for BOI promotion certificate
- Memorandum of association of the company
- Certificate of company registration
- A certificate stating the registered capital, authorized directors indicating signing authority and the registered address
- Shareholder list of the company
- Evidence of the transfer of funds from overseas corresponding to the minimum capital requirement requested by the BOI as per the BOI approval letter
Should this not be possible the applicant must send an explanation letter to the BOI seeking an extension of the deadline by four months (this can be done up to three times).
Timeline: 1 month
5) Foreign Business Certificate
If the business activities for which the BOI Certificate has been granted include activities regulated under the Foreign Business Act (really likely), a Foreign Business Certificate allowing the company to undertake the said regulated activities is required.
Timeline: 2 weeks
6) BOI Work Permits and Visa
For the company to be able to hire foreign staff, they must register their company into the e-expert system. Registration on the e-expert system will allow the company to make future requests for foreign workers.
After a job post has been submitted, opened, and accepted through the e-expert system, the applicant may apply for their visa and a work permit at the BOI one-stop service center (OSOS).
Timeline: 1 month
7) BOI Reporting and Compliance
After the company has received its investment promotion certificate, it must meet the following requirements:
- Within 30 months, the machinery and equipment must be imported to benefit from the reduction of taxes and duties
- Within 36 months, construction must be completed, the machinery and equipment installed, and the factory ready to commence operations.
- The company must ask for permission from the BOI if the operation has to be halted for longer than two months.
- The BOI must give written permission before a promoted company may mortgage, sell, lease, or transfer machinery which was imported, either exempt from, or at a lower tax rate. Additionally, permission must also be obtained to use machinery for non-approved purposes.
Should a company not satisfy any of the requirements set out by the BOI, The BOI will issue an official warning notice to the offending company. If there is no valid reason for the failure, the BOI may recommend to the Board that the promotion be withdrawn.
8) BOI Accounting
While BOI-promoted companies are eligible for attractive incentives, they are also subject to specific regulations and additional regulatory scrutiny.
One of the things that is often checked is your company accounts; it’s important to remember that accounting does not lie, so make sure you are aware of this.
Moreover, BOI companies will receive special accounting requirements for their specific promotion category. Please also note that BOI companies must adhere to the same mandatory reporting requirements for VAT, WHT, and SSF, and the filing of half-year and yearly auditing.
For more information on BOI accounting, please check out our article here.
How can Belaws help?
For more information about BOI companies in Thailand, why not talk to one of our experts now?
Please note that this article is for information purposes only and does not constitute legal advice.
Our consultations last for a period of up to 1 hour and are conducted by expert Lawyers who are fluent in English, French and Thai.
Consultations can be hosted via WhatsApp or Video Conferencing software for your convenience. A consultation with one of our legal experts is undoubtedly the best way to get all the information you need and answer any questions you may have about your new business or project.
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Frequently asked questions
What is Boi company Thailand?
A BOI company in Thailand refers to a company that has obtained a promotion from the Board of Investment (BOI). BOI promotions provide exclusive incentives and benefits to attract foreign investment. These incentives include tax exemptions, streamlined visa processes, infrastructure support, 100% foreign ownership, reduced quotas for hiring foreign employees, permits
What are the requirements for a Boi in Thailand?
Requirements for a BOI in Thailand:
To qualify for a Board of Investment (BOI) promotion in Thailand, various types of companies can apply in specific target sectors such as manufacturing, technology, research and development, tourism, agriculture, and renewable energy. The eligibility criteria and incentives may vary depending on the sector and the specific activities conducted by the company.
Can foreigners set up company in Thailand?
Yes, foreigners can set up a company in Thailand. However, certain restrictions apply depending on the business activities. For regular Thai limited companies, foreign ownership is typically limited to 49.9% due to the Foreign Business Act. However, companies that receive a BOI promotion are exempt from these restrictions and can be 100% foreign-owned.
How do I register my company in Thailand?
To register a company in Thailand, the following steps are generally involved:
- Feasibility Study: Conduct a feasibility study to assess the viability of the BOI application.
- BOI Application and Interview Process: Submit the required application forms and provide information about the company’s capital, project, employees, management team, and financial projections. The BOI officer will review the application and may ask for additional information. An interview with the BOI may also be required.
- BOI Approval and Acceptance of Terms: The BOI will notify the applicant of its decision within 7 days. The applicant has 30 days to accept the conditions of the BOI promotion.
- BOI Company Registration and License: Register the limited company within six months of BOI approval. The applicant may use an existing company, provided its capital is increased to meet the BOI’s requirements. Submit the required documents, such as the application form, memorandum of association, shareholder list, and evidence of capital transfer from abroad.
- Foreign Business Certificate: If the approved activities are regulated under the Foreign Business Act, obtain a Foreign Business Certificate.
- BOI Work Permits and Visa: Register the company in the e-expert system to hire foreign staff. Apply for work permits and visas at the BOI one-stop service center.
- BOI Reporting and Compliance: Comply with the BOI’s requirements, such as importing machinery and equipment, completing construction, and obtaining permission for certain actions.
- BOI Accounting: Adhere to specific accounting requirements for BOI-promoted companies and fulfill mandatory reporting obligations for VAT, withholding tax, social security funds, and auditing.
How much does it cost to register a business in Thailand?
The cost of registering a business in Thailand depends on various factors, such as the type of company, capital requirements, legal fees, and other related expenses. It is advisable to consult with professionals or seek legal advice to determine the exact cost based on your specific circumstances.
How do I get Boi approval?
To obtain BOI approval, you need to follow the application process outlined by the BOI. This includes submitting the required forms, providing information about your business project, capital, employees, and management team. The BOI officer will review your application and may request additional information. Once the application is accepted, a meeting will be held at the BOI office to present the project. The BOI officer will then present the project for approval at the next BOI Officer meeting. The timeline for BOI approval can range from 3 to 5 months.
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