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Why a BOI Promotion in Thailand Can Help Your Business
27/11/2023
Thailand’s developing economy and strategic location in Southeast Asia make it a great investment destination. In an effort to increase foreign investment, the Thai government has rolled out the red carpet for foreign investors through the Board of Investment (BOI). The BOI offers qualifying companies a range of incentives and benefits, including 100% foreign ownership.
A BOI promotion can give you a competitive edge in the Thai market and navigate the regulatory landscape.
Key points
- A BOI promotion removes many barriers to business in Thailand for eligible companies.
- Companies approved for a BOI promotion are eligible for special incentives such as 100% foreign ownership, reduced requirements to support work permits and tax incentives
- BOI promotions are only offered to companies that operate in specific areas of business activities identified by the BOI.
Why should companies always consider a BOI Promotion first?
Applying for a Board of Investment (BOI) promotion in Thailand is a strategic move for foreigners looking to establish a business in the country. Companies approved for a BOI promotion can take advantage of a range of special incentives and benefits to help their businesses.
By securing a BOI promotion, businesses can enjoy a competitive edge through 100% foreign ownership, and simplified procedures for obtaining visas and work permit.
What are the BOI benefits for companies?
The key advantages of a company obtaining a BOI promotion are as follows:
100% foreign ownership of a company
One of the most important advantages of getting a BOI promotion is being able to own 100% of a company as a foreigner. This is a significant advantage because typically Thai Limited companies are subject to a 49.9% foreign ownership due to restrictions on certain business activities by the Foreign Business Act. BOI companies do not have to worry about these restrictions.
Ability to undertake restricted business activities
The FBA restricts foreigners or foreign owned companies from undertaking over 50 categories of business activities in Thailand, meaning most companies would require a Thai partner in order to undertake such activities. However, BOI companies can apply for and, in practice, are granted a Foreign Business Certificate (FBC). A Foreign Business Certificate is a huge advantage for companies as it removes the restrictions of the Foreign Business Act (FBA) and allows BOI companies to be able to freely undertake their business activities.
Freedom to hire foreign skilled experts
Another important benefit, only available to BOI-promoted companies is the ability to easily hire foreign skilled experts. BOI companies are not subject to any quotas when hiring foreign skilled employees. This is due to BOI companies being exempt from the typical 4:1 Thai to foreign-employee ratio per employee that Thai limited companies must satisfy. This is an important benefit as it allows BOI companies to bring in the talent they need as quickly as possible.
This is also a significant advantage for the initial stages when starting the business and limiting the scope. Receiving a BOI promotion allows qualifying companies to hire foreign employees straight away, without having to satisfy any requirements. Therefore, BOI promoted companies do not need to worry about sourcing and maintaining Thai employees until they are ready. On the other hand, if a Thai Limited Company wants to hire 2 foreigners they would need to hire 8 Thai employees and absorb all the related costs of doing so.
Streamlined visa and work permit Applications
Foreigners employed at a BOI-promoted company can obtain their BOI visa and work permits from the One Stop Service Centre instead of the Labour or Immigration offices. The applicant process for applying for a work permit and visa is significantly different when compared to a Thai Limited Company.
BOI visa and work permits require pre approval before being issues, this is obtained by submitting all the required information via the BOIs online system, typically pre approval can take 1-2 months. Once pre-approval has been granted, the applicant can collect their visa and work permit from the One Stop Service Centre and can be completed in a day.
Obtaining a BOI visa and work-permit in Thailand can offer several advantages for foreign employees and companies. Here are some of the benefits:
Quick and efficient Service:
The One Stop Service Center is a significant advantage for applicants as getting a visa and work permit can be completed in a few hours. Please note, preapprovals must be obtained from the BOI by applying online. This service also means applicants do not need to go to Chaeng Wattana (outside of downtown and difficult to get to) and sit and wait for hours, sometimes even the whole day. The BOI visa applications do not require an under-consideration period like other visas, which means you only need to go to OSS once, not twice, like traditional visas.
Streamlined Processes:
The BOI visa and work-permit process generally have more streamlined procedures than standard work permits. For example, the required documents are submitted online for approval. This is significantly easier than a traditional visa and work permit, where the applicant must submit the documents on paper on the application day. Furthermore, for a traditional visa or work permit, the immigration office will check all the documents thoroughly; they may also reject the documents for not being printed correctly/clearly or even signed in black ink rather than blue. In such situations, the applicant will either have to find some way to rectify the problem or return another day. BOI visas and work permits, on the other hand, can simply resubmit and upload the documents. The applicant can pick up their visa once the BOI has reviewed and approved all the documents.
Visa Extensions:
A BOI visa’s extension process is typically smoother than regular work permits. The BOI provides support and assistance to its promoted companies, facilitating the visa extension process for their employees.
However, BOI companies must complete and have approved an online registration process which can be confusing and time-consuming. In practice we recommend starting the renewal process of any visas and work permit extensions within 3 months before the expiry of the existing visa and work permit.
During the renewal process, it is not uncommon for the BOI to ask for feedback and clarifications during the application process. Typically, if the BOI officer asks 3 rounds of questions or requests for feedback, the application will be voided and the process will need to be started again. So it is important to be accompanied by experienced experts who can help make the process as smooth as possible.
For more information about BOI visa and work permits, please see our blog post here.
Are there any tax benefits for BOI companies?
Depending on the business activity, companies may be awarded tax incentives from the BOI. It is important to note that not all BOI promotions are eligible for the tax benefits.
Potential tax incentives include:
- Exemption or reduction of import duties
- Exemption of corporate income tax and dividends (up to 8 years, depending on the business activity)
- Double deductions from the costs of transportation, electricity, and water supply
What business activities are eligible for a BOI promotion?
The Board of Investment (BOI) only offers promotions for businesses that undertake activities in specific industries. To be eligible for BOI support, a business must operate in one of the following industries:
- Agriculture and food
- Manufacturing
- Digital and technology
- Tourism and services
- Other high-value industries
For more information about which business activities are eligible for a BOI promotion, please review our blog post here.
Are there any drawbacks to a BOI promotion?
While the BOI offers companies may advantages and benefits, there are a few potential negatives to consider when applying for BOI promotion in Thailand:
Application process complexity:
The BOI application process can be lengthy and complex, requiring the submission of various documents and supporting information. This can be daunting for some investors, especially those who are not familiar with Thai regulations and procedures. Typically, the application process can take from 3 to 9 months to complete.
For more information, please see here.
Eligibility criteria:
Not all businesses are eligible for BOI promotion. Certain industries and business activities may be excluded, and there may be specific requirements related to investment amount (typically at least 1 million THB), employment creation, or technology transfer.
Post-approval compliance:
Once BOI promotion is granted, companies are required to comply with certain conditions and maintain records to show their compliance to the promotion criteria. Failure to comply can result in penalties or revocation of promotion benefits.
Limited duration of promotion:
A BOI promotion, depending on the promotion grants tax incentives to qualifying projects. These tax incentives are typically granted for a limited period, ranging from 3 to 10 years depending on the type of promotion and the industry. After the promotion period expires, companies may no longer be eligible for those tax benefits.
How can Belaws help?
For more information about how BOI promotions 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
How do I get a BOI promotion in Thailand?
To secure a BOI promotion in Thailand, companies need to apply through the Board of Investment (BOI) and undergo a comprehensive application process, which can take from 3 to 9 months. The application involves submitting various documents and meeting specific criteria related to business activities, investment amount, and other requirements.
What are the benefits of BOI in Thailand?
The benefits of a BOI promotion in Thailand include:
- 100% foreign ownership of a company.
- Ability to undertake restricted business activities without Thai partners.
- Freedom to hire foreign skilled experts without quotas.
- Streamlined visa and work permit applications through the One Stop Service Centre.
- Tax incentives, such as exemption or reduction of import duties and corporate income tax.
What is BOI approval in Thailand?
BOI approval in Thailand is the official endorsement granted by the Board of Investment to qualifying companies, allowing them to access various incentives and benefits. This approval is crucial for foreign businesses looking to establish a presence in Thailand and engage in specific business activities.
What is investment promotion in Thailand?
Investment promotion in Thailand, facilitated by the BOI, involves encouraging and supporting foreign companies to invest in the country. The promotion aims to boost the economy by providing incentives like tax benefits, foreign ownership privileges, and streamlined processes for foreign businesses.
What is a BOI in Thailand?
BOI stands for the Board of Investment in Thailand. It is a government agency responsible for promoting and facilitating foreign investment in the country. The BOI plays a key role in attracting businesses by offering incentives and benefits to qualifying companies.
How do I apply for a BOI?
To apply for a BOI promotion, companies should follow these steps:
- Review the eligibility criteria and supported business activities.
- Prepare the required documents.
- Submit the application to the BOI.
- Undergo the approval process, which may take 3 to 9 months.
- Once approved, comply with post-approval conditions to maintain benefits.
Can a foreigner start a business in Thailand?
Yes, foreigners can start a business in Thailand. In fact, the country is actively encouraging foreign investment. There are a few different ways for foreigners to start a business in Thailand, but the most common is to register a Thai Limited Company. Thai Limited Companies can be 100% foreign-owned, depending on the type of business.
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