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After changing the government policies for foreign direct investment (FDI) as issuing the Foreign Business Act B.E. 2542 (1999), there are a lot of increasing benefits and incentives for foreigners and foreign companies especially tax benefits. This article has gathered fundamental knowledge about tax concerns together with the benefits, utilizations and awareness for sequential topics purposes.
How can the foreigner set up the major owned company in Thailand?
Since 1999, there have been the options for foreign to set up the major owned business. However, the Company limited form is recommended. In some cases, a Foreign Business License (FBL) is required for some foreign business activities or purposes. This is due to the law requires the permission for some businesses which are businesses related to national safety or security, businesses having impacts on arts, culture, traditions, customs and folklore handicrafts or businesses having impacts on natural resources or the environment.
Related benefits for foreign company in Thailand
There are incentives and promotional privileges for foreign company in Thailand by applying the investment promotional form to the Board of Investment (BOI). BOI is formed under special purposes law which its responsibilities include the grant of incentives, benefit, and promotional schemes for foreign company in Thailand.
Such benefits and incentives (from 2023 – 2028 application period) are shown below and the significant benefits and incentives depending on the project, investment size and type of business.
Significant incentives and promotional schemes
- New and used machines are allowed to be imported with imported tax exemptions.
- Foreigner can work with live in Thailand with work permit and VISA under the incentive scheme.
- Exemption of corporate tax and dividend for certain period from 3 – 13 years.
- Additional Exemption 50% after the promotional period.
- Exemption of import duty for the raw materials which are manufactured and re-exported within a certain period.
- Double deduction of corporate income tax for transportation and utilities.
- Right to hold the properties and real estate in certain areas such as some promotional zones.
Special tax incentives under promotional scheme and double tax agreement
The special tax incentives under promotional schemes are sampled below.
- Additional 200% deduction of corporate income tax as expenditures for training and human resources development
- Additional deduction of corporate income tax as expenditures R&D up to 13 years Etc.
How can a foreign company claim the tax or refund the tax?
The claims for the incentives and privileges are normally included in the annual corporate tax filing form. It will be attached with the auditor’s report and annual financial statements. The refund of corporate income tax will be claimed as corporate tax refund form.
Salient points for transfer pricing
Due to Thailand is the membership of OECD and related fair-trade organization, the market price will be investigated. Fundamentally, the declaration form must be annually submitted to the Revenue Department. Foreign company is subjected to be sure for the fair or market price.
Reference/ Citation
https://www.boi.go.th/upload/content/BOI_A_Guide_EN.pdf
