ICT, Software and Electronics Industry in Thailand

         The Board of Investment has approved new incentives for the electrical and electronics industry conferring premium privileges for projects which re-invest. The incentives are expected to dramatically boost the competitiveness of companies investing in Thailand’s electronics industries and will encourage them to fill out their local supply chains.

      The Board, chaired by Deputy Prime Minister and Minister of Commerce Somkid Jatusripitak, passed the incentives to accelerate Thailand’s dominance in electronics and solidify it as the electronics hub of Southeast Asia. Thailand’s electronics industry, led by HDD and IC production, is a dynamic force behind the nation’s economy, comprising 12% of manufacturing output and 19% of exports.

      The new incentives allow electrical and electronics companies to combine earlier projects into follow-on projects, automatically extending corporate income tax exemption periods for operations begun in earlier phases. As a result, projects from earlier phases would, in effect, be able to receive more than the current maximum of 8 years income tax holiday.

      To be designated a long-term investment project, a plan of at least 15 billion baht (US$37.5 million) of investments must be submitted before operations of the first project begin. All projects in the plan must lie within the electrical and electronics industry’s supply chain.

     As a condition of being designated a long-term investment project, companies are required to participate in the BOI’s STI program, which was also revised during the meeting. Projects must make investments in at least one of three activities that develop Skills, Technology and Innovation (STI) in Thailand: 1) R&D or design, 2) advanced technology training, 3) support for educational or research institutions. Minimum STI investments required are calculated based on the investment location zone, ranging from 1-2% of total sales generated.

      To help companies remain globally competitive, the BOI has also granted project life-time duty exemptions for upgraded or replacement machinery for all electrical and electronics projects. Non-BOI promoted companies which supply to exporters of electronics, plastics and automotive goods are now eligible for duty-free raw materials.

      The Board also granted longer corporate income tax exemptions for investments in production of HDDs and parts, integrated circuits, and other electrical and electronic products according to investment zone.
— By Renee Santo

More information on the new and amended privileges approved at the December 8 Board Meeting is available by contacting head@boi.go.th.

Expanded Corporate Income Tax Exemptions
for Electronics Projects

		Zone 1		Zone2		Zone 3
IE = Industrial Estate		Outside IE	Inside IE	Outside IE	Inside IE	Outside IE	Inside IE
Previous Privileges (# of years)	Electrical & Electronics	-	3	3	7	8	8
	HDD & parts	4	4	6	6	8	8
	ICs	4	4	6	7	8	8
New Privileges (# of years)		5	5	6	7	8	8

Note: Priority activities, such as wafers and solar cells, maintain 8-year corporate income tax exemptions regardless of location. Long-term investment projects would be able to extend the above income tax exemptions by combining previous projects into follow-on projects.