New incentives under Thailand investment laws


The Investment Promotion Act (1977) has been amended by Thailand’s newly announced Investment Promotion Act (2017), effective from 25 January 2017. The rationale behind the amendment is to keep the act up to date with economic, technological and investment trends.

Subject to more specific announcements from the Board of Investment (BOI), the new Investment Promotion Act has broadened the scope of exemption of import duties. The former Investment Promotion Act granted exemption of import duties only for materials used for manufacture for re-exportation, which has now been revised to include materials imported for used domestically in R&D activities and related testing.

The BOI may also now grant corporate income tax (CIT) exemption for a period of up to 13 years for certain R&D and advanced technology and innovation activities. Previously, the maximum period of CIT exemption provided by the BOI for various activities was limited to eight years.

In addition, the new act empowers the BOI to grant CIT rate reduction privilege instead of only CIT exemption. This will allow some businesses that may not qualify for CIT exemption to get some tax reduction benefits.

Even for projects that are neither eligible for the said CIT exemption nor CIT reduction, the BOI is empowered to grant privilege such that projects may be permitted to deduct 70% of the amount invested in the promoted business from the net profits derived from the promoted business (in addition to a deduction of normal depreciation) for a period of up to 10 years when calculating the CIT to be paid.

The new act is also more favourable in terms of the duration for the payment of dividends derived from the promoted business. The exemption of tax for dividends extends to dividends that are declared within the exemption period and paid within six months from the expiration of the exemption period. The previous act only offered this benefit for dividends that were actually paid within the exemption period.

Finally, in past years it was often confusing as to whether the calculation of the net profit and loss of a promoted business that is entitled to CIT exemptions must be done pursuant to the BOI’s practice or the Revenue Code. To resolve this, the new act clearly prescribes that such calculation must be done pursuant to the Revenue Code.

Apart from the amendment to the existing investment law, a new investment act was enacted on 14 February 2017. The National Competitiveness Enhancement for Target Industries Act (2017) is now officially in force.

However, the regulations and announcements that would clarify certain definitions and terms under the act are still working their way through.

The main idea of the competitiveness enhancement act is to establish a new and effective tool to attract foreign investment with respect to businesses involving advanced technology and innovations. The competitiveness enhancement act provides various incentives to promote businesses such as CIT exemption for up to 15 years and other non-tax benefits granted by the BOI under the Investment Promotion Act.

The act establishes a Competitiveness Enhancement Fund, starting with 10 billion baht (about US$295 million) that has been contributed by the government pursuant to this act. The fund will be used to support or subsidize promoted businesses pursuant to the terms and conditions of the act.

Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by emailing: Danian Zhang at, or for general enquiries contact Anand Ramaswamy at