Thailand BOI adds hydrogen to newly presented incentives

The Thailand Board of Investment (BOI) updated its incentive programs as part of the implementation of its new five-year strategy.

The first package for investment in sustainable activities, such as the production of hydrogen vehicles and the establishment of electric vehicle (EV) battery swapping stations, is among the packages. It includes, for the first time, a set of special privileges to support expansion by long-standing investors, a comprehensive relocation program covering headquarters as well as research and manufacturing facilities, and a set of relocation benefits covering both headquarters and both.

The 2023–2027 Investment Promotion Strategy, which was unveiled in October, aims to assist in Thailand’s economic restructuring and make sure the nation is progressive, competitive, and open to all as it competes in the post–Covid–19 world. In order to reinforce the nation’s position as a regional hub for commerce, trade, and logistics, the plan aims to promote technological advancement, the transition to green and smart industries, talent development, as well as creativity and innovation. The bio-circular-green (BCG) sector, the EV supply chain, electronics manufacturing, the digital economy, and creative industries are the other five areas identified in the strategy as priority industries.

Program for Retention and Growth

With approval for a new project or expansion project with an investment of 500 million baht or more, long-standing investors—defined as businesses that over the previous 15 years have received investment benefits for at least three projects with a combined investment value of not less than 10 billion baht—will be given special incentives, such as an additional corporate income tax (CIT) exemption for up to three years or a 50% CIT reduction for up to five years, depending on the project.

Move-On Program

Companies moving all of their operations, including their regional headquarters, research and development (R&D) centers, and manufacturing facilities to Thailand will be eligible for an additional CIT exemption for 5 years under the relocation program. According to the industry, businesses moving their manufacturing and regional headquarters will earn an additional 3 years of CIT exemption, whereas businesses moving their manufacturing and R&D center will receive an additional 1 to 5 years of CIT exemption. Only revenue from the manufacturing activities that have been relocated is eligible for any CIT exemptions.

New Industry Categories are Being Created

The board approved the formation of new supported industry sectors, particularly sustainable activities, that would receive specific incentives in order to hasten the transition to the new economy. The creation of electric vehicle (EV) battery switching stations, the production of hydrogen vehicles, novel foods, organic foods, etc. are some of the new categories.

In terms of renewable energy, the newly promoted business kinds include those that produce hydrogen and its related products, such as green ammonia, as well as those that produce power and steam using hydrogen.

Sectors of Advanced Technology

Investments in upstream high-tech industries including biotech, nanotech, and advanced materials that involve technology transfer and collaboration with Thailand’s higher education institutions and research organizations will receive premium incentives. According to the BOI’s nomenclature, these projects, which are categorized as “A1+,” will be eligible for 10 to 13 years of CIT exemption without a cap, depending on the activity. Wafer fabrication has been moved up to this category and will now qualify for a 13-year CIT exemption, as opposed to the prior 10-year exemption.

New Economic Routes

The board also approved the designation of four areas of Thailand, totaling 16 provinces, as special investment zones for new economic corridors. Numerous incentives are offered for investments in these sectors.

The four regions, which are the Northern Economic Corridor, North-Eastern Economic Corridor, Central-Western Economic Corridor, and Southern Economic Corridor, will expand the current Eastern Economic Corridor, a region of industrial and high-tech development.

Efficiency of Business

The board also approved the creation of a Sub-Committee on the Resolution of Obstacles and Facilitation of Investment, which will act as a special mechanism to further increase the ease of doing business by addressing particular pain points raised by investors. This committee will work in conjunction with the Prime Minister’s Office and other state agencies.

Beginning in January 2023, the new incentives will be in place.

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