By Florian Maier, Managing Director and Phi Ploenbannakit, Director – Antares Advisory, part of Antares Group
What are the HR incentives granted by the BOI?
The Thai government is active in pursuing industrial and technology development in the eastern seaboard region under the umbrella of the Eastern Economic Corridor (EEC). The promoted territory initially comprises three provinces, namely Chachoengsao, Chonburi, and Rayong. Economic development in the region requires not only foreign and local investment in large infrastructure and production facilities, but also highly skilled human resources as key components to the project’s success. Project goals include increases in the employment rate, macro spending, and production to achieve a healthier national income on one side, and to attract more investment by high-skilled human resources capable of helping develop the industries of the future with competitive pay grades on the other side. To promote the human resource and skill development in the EEC, an investment promotional campaign has been launched by the BOI giving extensive tax and non-tax incentives to the investor whose qualifications meet specific criteria.
Major qualifications to obtain the extensive privileges from the BOI
The applicant must comply with three mandatory requirements. First, the investment must be directed to ten-targeted industries according to the BOI’s Announcement, which are:
(i) Agriculture & Biotechnology
(ii) Food for the Future
(iii) Automation & Robotics
(iv) Aviation & Logistics
(v) Biofuels & Biochemicals
(vi) Digital Industry
(vii) Medical Hub
(viii) Next-Generation Automotive
(ix) Smart Electronics
(x) Affluent Medical and Wellness Tourism
Second, business activity must be performed and located in the EEC promotional zones within Chachoengsao, Chonburi, and Rayong, either in:
(i) Investment Promotion Zones for Targeted Activities
(ii) Investment Promotion Areas for Targeted Industries
(iii) BOI-promoted Industrial Estates or Zones
Last, there must be a collaboration with regards to human resource development between the applicant and an academic institution, a research institute, or a centre of excellence as approved by the BOI. The collaboration can be demonstrated by an admission plan for interns in course of study through a graduate program that allows them to be trained by a professional in the facility.
Additionally, the BOI will give extensive privileges to the investor whose targeted industry in the EEC zones will contribute to human resource development.
As a promotion to any investor whose qualifications are meant to support the skilled workforce in targeted industries in the EEC, the BOI will extend the tax and non-tax incentives for them.
A Corporate Income Tax (CIT) holiday can be additionally granted on top of the ordinary exemption of import duties on machinery and raw materials used in production for export to the successful applicant subject to the investment cap and none cap according to the following type of activities as specified by the BOI:
Section 8: Up to 13 years CIT holiday for technology and innovation development that includes targeted core technology development areas such as development of biotechnology, nanotechnology, advanced materials technology, and digital technology
A1: Up to 12 years CIT holiday for knowledge-based activities focusing on R&D and design to enhance the country’s competitiveness
A2: Up to 12 years CIT holiday for infrastructure activities for the country’s development, activities using advanced technology to create value added, with no or very few existing investments in Thailand
A3: Up to 7 years CIT holiday for high technology activities, which are important to the development of the country, with a few investments already existing in Thailand
The ordinary non-tax incentives are: permission to bring in foreign workers under the BOI’s work permit and visa, permission to become a 100% foreign owned entity by share capital subject to the foreign business restrictions, and permission to own land.
Other than the typical BOI’s work permit and visa, the qualified applicant in the targeted industries can also apply for the “Smart Visa”. The Smart Visa may be given to the foreign investor acting as a shareholder, the management, and the highly skilled staff. Visas are also granted for their family members. The benefit of this kind of visa is that it is valid up to 4 years and a residency report is required only once a year, as opposed to the ordinary 90-day reporting.
Skilled personnel in the targeted industries will be qualified to receive a Smart Visa, Type T (Talents), on the conditions that he/she has the monthly salary of not less than 200,000 Baht, is under an employment or service contract of not less than 1 year, and is recognized by the related government organizations.
The human resource development program as promoted by the BOI encourages the hiring of suitable skilled persons for the business. The Smart Visa has been introduced to attract foreign professionals to exchange and transfer expertise and develop the local workforce. Well-trained personnel will eventually increase productivity and effectiveness, keeping in mind that the country overhead costs would be by default reduced by the tax and duty exemption privileges. The expansion of the skilled labour market will also allow the investor plenty of diversified choices for recruitment under arm’s length offers in the open market.
The migration of foreign skilled labour will attract investment to Thailand in addition to helping reskill the local workforce. A higher employment rate will result in greater consumption which triggers a demand for supply chain in the production sector. Therefore, the HR incentives from the BOI are a reciprocal arrangement where the country and investors benefit from mutual human resource development.
Caution & Disclaimer
This publication is intended to highlight an overview of key issues for ease of understanding, and not for the provision of legal advice. Please note that this publication might be subject to further amendment without notice.
We highly advise you to read this update in conjunction with appropriate advice from your legal counsel to determine the legal implications this update might have on your business and how to mitigate exposures as much as possible.
If you have any questions about this publication, please contact us.
Florian is the Managing Director of Antares Advisory. He joined Antares in 2014. Prior to that, Florian has been working for a German-owned law firm in Bangkok and, subsequently, for 5 years for a law firm in Stuttgart, Germany, advising mid-sized German companies with respect to international contract law.
He speaks German, English and French and he has an extensive experience in all legal matters, including tax law.
He can be reached at firstname.lastname@example.org or +66 (0) 83 669 0834.
Phi is the Director of Antares Advisory. He holds a LL.B. and subsequently a LL.M. in Business Laws, program held in English, from Thammasat University. He is a member of the Lawyers Council of Thailand and the Thai Bar Association. Phi is a Thai licensed lawyer and Notarial Services Attorney.
His area of practice covers corporate & commercial law, M&A, legal due diligence, labor law, property law, family law, litigation and arbitration. He has extensive experience in assisting corporate and individual clients in identifying the root cause, finding the best solutions and alternatives to mitigate the exposure and take the right decision.
He can be reached at email@example.com or +66 (0) 98 824 4186.
Company website: www.antaresgroup.com