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BOI to offer Smart City promotion incentives in Thailand
20/10/2022
Thailand has placed a lot of emphasis on the Thailand 4.0 project, which aims to promote Economic Prosperity, Social Well-being, Raising Human Values and Environmental Protection. Together with the 2018 EEC Act, the new Smart City initiative, is expected to promote economic, infrastructural, technological and social transformation.
As part of the BOIs wish to attract new FDI to the EEC, Foreign companies who establish their operations there, are eligible for a number of benefits. In this article we will take a look at the incentives available for foreign companies who operate within a Smart City.
Key points
- Incentives available for Smart City projects include eight years of corporate income tax exemption and other non-tax incentives. Such non-tax incentives include the right to own land; five-year work visas for investors, specialists and scientists.
- Incentives are available to public entities, a public-private partnership, or a Thai Private Entity that has been awarded the right to undertake a Smart City project.
What is the BOI?
Thailand’s Board of Investment is a special government agency who focuses on promoting foreign investment within Thailand. A BOI promotion removes many of the 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 also provides the following incentives for qualifying projects:
- Tax benefits such as income tax exemptions for a fixed period.
- 100% foreign ownership of a company.
- Reduced requirements for supporting work permits i.e. no quotas for hiring foreigners
- The ability to own land.
What are Smart Cities?
Thailand introduced the Eastern Economic Corridor (EEC) initiative as a way to transform Thai provinces into Smart Cities. Several cities across seven provinces have committed to pursuing Smart City development. These provinces include Phuket, Chiang Mai, Khon Kaen, Chon Buri, Rayong, Bangkok, and Chachoengsao.
The aim of these Smart Cities is to create a centre for trade, investment, regional transportation, and a strategic gateway to Asia.
The Eastern Special Development Zone Act B.E. 2561 (the EEC Act), was enacted as a way to encourage infrastructure and economic development in the Eastern Economic Corridor (EEC) region of Thailand. It was also hoped this Act would boost investment in Specific Targeted Industries, through Smart City Promotion Incentives. These incentives would be available to companies whose products can improve the quality of life in Thailand in the following six areas:
1. Smart Mobility, to reduce urban congestion by improving public transportation efficiency, while also reducing the incidence of traffic accidents, improving air quality, and reducing the parking footprint.
2. Smart People, to improve education and social equity among Thai citizens.
3. Smart Living, to promote a healthy, safe and culturally vibrant society
4. Smart Economy, to improve the ease of doing business, foster productivity, stimulate entrepreneurship and innovation, and increase local and global interconnectedness.
5. Smart Governance, to encourage more efficient public services, enable supply & demand side policies, promote transparency and open data, and enact ICT & eGov policies.
6. Smart Energy & Environment, to provide green energy, green buildings and green urban planning, for a clean and safe environment.
The vast majority of investment applications to the Board of Investment (BOI) in recent years were for projects in the EEC.
What incentives are on offer from the BOI for Smart City projects?
The Board of Investment (BOI) Thailand offers a number of incentives to foreign as well as domestic companies in the technological innovation arena.
Incentives available for Smart City projects include eight years of corporate income tax exemption and other non-tax incentives.
Such non-tax incentives include the right to own land; five-year work visas for investors, specialists and scientists.
What are the requirements for these incentives?
Smart City proposals may be submitted by anyone who satisfies the following criteria :
1. a public entity; or
2. a public-private partnership; or
3. a Thai Private Entity that has been awarded the right to undertake the proposed Smart City project.
The Thailand Smart City Steering Committee will determine whether a proposal submitted by an applicant falls within any of the six smart platforms mentioned above and whether they qualify for the incentives on offer.
How can Belaws help?
To learn more about the BOI in Thailand, why not talk directly to one of our experts.
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
Can a foreigner open a company in Thailand?
Yes it is possible for a foreigner to open a company in Thailand. There are also options available which allow 100% foreign owned companies as well.
How much does it cost to set up a company in Thailand?
The official fees for registering a company in Thailand are THB 7,500.
How do I start a limited company in Thailand?
- Step 1: Choose and register a company name.
- Step 2: Draft and file the Memorandum of Association.
- Step 3: Call and hold a Statutory Meeting of the shareholders
- Step 4: Register the Company with the Ministry of Commerce.
- Step 5: Register the company for Value-Added Tax (VAT) and Income Tax
Is it good to start a business in Thailand?
Thailand is an attractive option for those wishing to start a business. Thailand has a great infrastructure in place and scheme such as the BOI provide great incentives for companies to take advantage of.
How much money do you need to start a business in Thailand?
Typically, it costs between THB 40,000 to THB 60,000 (excluding VAT and Government fees) to start a business in Thailand.The official fees for registering a company in Thailand are THB 7,500.
How can a foreigner start a small business in Thailand?
Yes, foreigners can start a business in Thailand. However, certain business activities are restricted by the Foreign Business Act and in order for businesses to undertake them they must obtain a Foreign Business Licence/Certificate which can be time consuming and complicated.
What is the biggest problem in Thailand?
The biggest problem facing foreign owned companies is being able to undertake their desired business activity as a 100% foreign owned company. Many business activities are protected by the Foreign Business Act and in order for a company to operate in these protected industries, they will be required to be majority owned by Thai Shareholders (unless a BOI promotion has been obtained).
Why is it hard to do business in Thailand?
The Foreign Business Act limits to the business activities a 100% foreign owned company can undertake. This means Thai Shareholders will need to be sought or a BOI promotion obtained in order for a company to legally operate.
Can I own a company in Thailand?
Yes, foreigners can start a business in Thailand. However, certain business activities are restricted by the Foreign Business Act and in order for businesses to undertake them they must obtain a Foreign Business Licence/Certificate which can be time consuming and complicated.
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