Thailand: New Incentives for Investor Retention, Relocation, High-Tech, and Green Industries

Thailand has introduced new incentives aimed at supporting high-tech industries, tax exemptions for companies relocating to the country, and rewarding existing investors, among others.

The new incentives were issued to advance Thailand’s Five-Year Investment Promotion Strategy’s goals which seek to promote higher-value-added activities post-COVID-19.

Thailand has introduced a package of incentives aimed at promoting investment and upgrading the economy, with measures ranging from rewards for existing investors to support for high-tech industries.

The incentives were announced by Thailand’s Board of Investment (BOI) on November 4, 2022, following a board meeting held the previous day. They include tax exemptions, the creation of newly promoted industry categories, and regional special investment zones.

The incentives mark the first major policy release since the announcement of the country’s new Five-Year Investment Promotion Strategy in October 2022. The strategy, which will last from 2023 to 2027, seeks to transform Thailand’s economy by promoting investment in innovative, high-tech, and green industries.

In this article, we look at the new incentives and how they contribute to Thailand’s economic ambitions.

Thailand’s new incentives

Thailand’s new incentives will take effect from January 1, 2023, and are summarized as follows.

Investor retention and expansion program

The incentive package introduces tax exemptions to reward longstanding investors already active in Thailand. It is the first time that the Thai government has issued incentives for this type of investor.

Specifically, companies that have been granted investment benefits by the Thai government for at least three projects over the last 15 years with a combined investment value of at least 10 billion baht (US$265 million), and that are seeking approval for a new project or an expansion project worth THB 500 million or more, can receive special incentives. These include a corporate income tax (CIT) exemption for up to three years or a 50 percent CIT reduction for up to five years depending on the type of activity.

Relocation program

The incentive package establishes a new relocation program to reward companies that relocate their activities to Thailand with CIT exemptions. Namely, these are regional headquarters, research and development centers, and manufacturing facilities. The CIT exemption, however, only applies to revenue from relocated manufacturing activities.

Companies that relocate all three of these activities to Thailand will receive a CIT exemption of five years. Those that relocate just their regional headquarters and manufacturing facilities will receive a three-year CIT exemption. Companies that relocate just their research and development centers and their manufacturing facilities will receive a CIT exemption between one and five years, depending on the industry.

New promoted industry categories

Additional industries will be considered “promoted industry sectors” with the passing of the incentive package. Promoted industries are eligible to apply for the BOI’s investment promotion policies, which include tax, land, and hiring incentives, among others.

The newly promoted industries particularly target environmentally sustainable industries. These include the manufacturing of hydrogen vehicles, installation of electric vehicle battery swapping stations, novel food, organic food, hydrogen production, and power and steam generation from hydrogen.

Premium incentives for advanced technology

The incentive package grants “premium incentives” to investments in upstream industries entailing innovation and high-tech, which the BOI classifies as “A1+” investments. Relevant industries include biotech, nanotech, and advanced materials.

To qualify, projects must involve technology transfer and cooperation with Thai education and research institutions. Qualified projects can receive CIT exemptions without a cap for up to 10 to 13 years, depending on the activity. The package upgrades water fabrication to the A1+ category, extending the maximum CIT exemption for such activities from 10 years to 13 years.

New special investment zones

Four regions of Thailand spanning 16 provinces will be designated as special investment zones through the incentive package. The four areas are the Northern Economic Corridor, the North-Eastern Economic Corridor, the Central-Western Economic Corridor, and the Southern Economic Corridor.

Special investment zones benefit from numerous incentives. The creation of new special investment zones follows the success of Thailand’s Eastern Economic Corridor, which has been a popular destination for investment since its establishment in 2017.

Ease of doing business

The final component of the incentive package will see the establishment of the Sub-Committee on the Resolution of Obstacles and Facilitation of Investment. According to the BOI’s press release, the sub-committee will cooperate with the Prime Minister’s Office and other agencies to improve the ease of doing business in Thailand by addressing pain points flagged by investors.

Driving high-tech and green investment

The BOI’s incentive package puts considerable emphasis on attracting investments in high-tech and environmentally sustainable industries. It marks the continuation of the “Thailand 4.0” strategy to move Thailand away from an export-driven economy dependent on low labor costs and natural resources.

“Thailand 4.0” is an innovation strategy that lies at the heart of the Thai government’s economic planning. It seeks to transform Thailand into an innovative high-tech economy by developing targeted industries and regions.