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BOI Promotions for Software Development Companies
15/09/2023
Thailand has positioned itself as an appealing choice for software development firms seeking an ideal location to establish their presence. The reason for this popularity stems from the opportunity to receive incentives granted by the Thailand Board of Investments (BOI). These incentives available as part of the BOI promotions for software development offer many enticing advantages, including complete foreign ownership, potential tax incentives, and facilitating work permits for foreign staff.
Another noteworthy aspect of the BOI promotion, particularly appealing to software development companies, is the relatively manageable application and audit requirements. The initial capital deposit requirement currently stands at 1 million THB, and the initial operational years do not impose stringent auditing processes.
Key points
- A BOI promotion removes many barriers to doing business in Thailand, such as the restrictions of the Foreign Business Act.
- Companies approved for a BOI promotion are eligible for special incentives such as 100% foreign ownership, tax incentives, and reduced requirements to support work permits.
- The Development of software, digital platforms, or digital content is eligible for a BOI promotion.
- E-commerce is no longer eligible for a BOI promotion.
What is the BOI?
Thailand’s Board of Investment is a special government agency that focuses on promoting foreign investment within Thailand. A BOI promotion removes many barriers to doing business in Thailand, such as the restrictions of the Foreign Business Act.
More detailed information relating to the Foreign Business Act can be found here.
Furthermore, the BOI provides the following incentives for qualifying projects that could offer significant advantages to qualifying companies.
Incentives available include:
- 100% foreign ownership
- Reduced requirements for hiring foreign staff
- Permit to own land
- Streamlined visa and work permit processes
- Permit to remit money abroad in foreign currency
Tax Incentives are available for certain business activities and promotions as well. Examples include:
- 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
- Up to Eight-year corporate income tax exemptions
For more information about the BOI, please check the following blog posts:
BOI Company Formation in Thailand
What BOI Promotions are available for Software companies?
In a recent shake-up of the eligible activities, the Thailand Board of Investment (BOI) announced changes to the investment promotion for software, digital platforms, and digital content. The previous actions of Software, E-Commerce, and Digital Services have been consolidated and replaced by the newly added activity Section 8.1 – Development of software, digital platforms, or digital content.
Please note that e-commerce is no longer supported as a business activity eligible for a BOI promotion.
What are the requirements for a promotion under Section 8.1 – Development of software, digital platforms, or digital content?
To be eligible for a promotion under Section 8.1, applicants must be able to satisfy the following requirements:
- Each project must meet a minimum annual investment capital requirement of 1,500,000 baht. This calculation is based on the additional salaries incurred for Thai information technology personnel after the investment promotion application. Please note that foreign specialists, shareholders, and directors are not included.
- Have a capital investment (excluding land, working capital, and vehicle) of not less than 1 million baht. However, in practice, a minimum capital investment of 1,500,000 THB is often required.
- The project must involve the development of software, digital platforms, or digital content in Thailand in accordance with the guidelines set by the BOI.
- Projects have the option to utilize existing or previously used machinery.
- This investment promotion does not encompass the retail and wholesale of various product types.
What is meant by software, digital platforms, or digital content?
These examples illustrate potential projects where software, digital platforms, or digital content development takes place in Thailand and would satisfy the requirements to receive a promotion from the BOI:
Software Development Project: A company that established a project in Thailand focused on creating a new software application. The software will be designed and developed within the country, making it eligible for investment promotion.
Digital Marketing Platform: An organization sets up a project to develop an advanced digital marketing platform. The development process takes place in Thailand, allowing the project to qualify for investment incentives.
E-learning Content Creation: A startup initiates a project to create interactive e-learning content for various subjects. The content development, including video production and interactive modules, is carried out in Thailand, making the project eligible for promotion.
Mobile App Development: A technology company establishes a project to design and develop a mobile app for a global audience. The entire app development process, from coding to user interface design, occurs within Thailand, meeting the investment promotion criteria.
Gaming Studio: A gaming studio launches a project to produce a new video game title. All aspects of game development, including coding, graphics design, and audio production, are conducted within Thailand, making the project eligible for investment incentives.
What incentives are available to companies awarded a promotion under Section 8.1?
Should a company be awarded a promotion for developing software, digital platforms, or digital content, they would be eligible for the following incentives.
100% Foreign Ownership: While regular Thai Limited companies are typically limited to 49.9% foreign ownership due to the Foreign Business Act, BOI-promoted companies face no such restriction, allowing complete foreign ownership.
Foreign Business Certificate: BOI-promoted firms receive a Foreign Business Certificate, exempting them from the 50+ restricted business categories under the Foreign Business Act. This opens up opportunities for a wider range of business activities in Thailand.
No Employee Quotas: Unlike other structures, BOI-promoted companies face no quotas when hiring foreign skilled employees. For example, Thai Limited Companies typically need a 4:1 ratio of Thai to foreign employees, but this requirement doesn’t apply to BOI-promoted businesses.
Other non-tax incentives:
- Permit to own land
- Streamlined visa and work permit processes
Successful applicants will also be eligible for the following income tax exemption.
The corporate income tax exemption cap of 100 percent of the actual expenditure for the incentive is as follows:
- Expenditure on salaries for Thai information technology personnel additionally employed in comparison with Thai information technology personnel employed before the application submission date for investment promotion.
- Expenditure on the information technology development-related training course to develop Thai personnel’s skills.
- Expenditure on the operation to acquire the standard quality system certificate ISO 29110 or CMMI from Level 2 or other equivalent international standards.
How can Belaws help?
For more information about the BOI 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.
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Frequently asked questions
What is BOI Promotion Thailand?
BOI Promotion Thailand, also known as the Thailand Board of Investments (BOI) promotion, is a government initiative aimed at promoting foreign investment in Thailand by offering various incentives to qualifying companies.
What is BOI approval in Thailand?
BOI approval in Thailand refers to the process by which companies are granted permission to benefit from the BOI promotion. It involves meeting certain eligibility criteria and requirements set by the BOI.
What are the non-tax incentives in Thailand?
The non-tax incentives in Thailand offered through the BOI promotion include:
- 100% Foreign Ownership
- Foreign Business Certificate
- No Employee Quotas
- Permit to Own Land
- Streamlined Visa and Work Permit Processes
What are the benefits of BOI?
The benefits of the BOI promotion include:
- Attractive Investment Environment
- Complete Foreign Ownership
- Tax Incentives
- Flexible Hiring
- Ownership of Land
What are the benefits of a BOI company?
The benefits of a BOI company include:
- 100% Foreign Ownership
- Foreign Business Certificate
- No Employee Quotas
- Land Ownership
- Streamlined Processes
- Tax Exemptions
- Incentives for Software Development
How does the BOI promote foreign investment in Thailand, and what are some of its key incentives?
The BOI promotes foreign investment in Thailand by offering key incentives such as 100% foreign ownership, tax incentives, and streamlined processes for work permits and visas.
What is the significance of the Foreign Business Certificate for companies approved for BOI promotions?
The Foreign Business Certificate exempts BOI-approved companies from certain restrictions under the Foreign Business Act, allowing them to engage in a broader range of business activities in Thailand.
What are the eligibility requirements for companies seeking a promotion under Section 8.1 – Development of software, digital platforms, or digital content?
To be eligible for a promotion under Section 8.1, companies must meet requirements such as a minimum annual investment capital, capital investment, and involvement in the development of software, digital platforms, or digital content in Thailand.
Can you provide examples of projects that would qualify for a BOI promotion under Section 8.1?
Projects that qualify for a BOI promotion under Section 8.1 include software development, digital marketing platforms, e-learning content creation, mobile app development, and gaming studios.
What are the income tax exemption benefits available to companies awarded a promotion under Section 8.1?
Companies awarded a promotion under Section 8.1 may be eligible for income tax exemptions, including exemptions related to IT personnel salaries, training expenses, and quality system certificates.
Why is Thailand considered an appealing choice for software development firms according to the article?
Thailand is considered appealing for software development firms due to incentives like complete foreign ownership, tax advantages, and simplified work permit processes, making it an ideal location to establish their presence.
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