Thailand: Promotion for Software development, platforms for digital services or contents

​published on 11 November 2021 | reading time approx. 2 minutes

Under Announcement Sor 4/2564 dated September 16, 2021, the Thai Board of Investment amended the promotions for IT services. The existing incentives were cancelled and replaced with a new promotion titled “Development of software, platforms for digital services or digital contents”. The grants include extensive tax and non-tax incentives, but are also linked to very clearly defined requirements.

Under Announcement Sor 4/2564 dated 16th September 2021 the Thai Board of Investment has changed promotions for IT related services.
 
The existing promotions under item 5.7 (Software), 5.8 (E-Commerce) and 5.9 (Digital Services) have been cancelled. Instead, the BOI has introduced a new promotion under item 5.10 titled “Development of Software, Platforms for Digital Services or Digital Contents”.
 
The requirements are as follows:

• An investment capital of not less than THB 1.5 million; the actual required capital will be calculated based on the necessary salary expenses of Thai IT personnel;
• Software development process still be required

Notably, wholesale and retail activities are not permitted.
 
The promotion grants interesting incentives such as:

non-tax incentives

• Permission to operate the business 100 percent foreign-owned
• Eased procedure for obtaining visa and work permit for expatriates
• Limited permission to own land
• Permission to take out or remit foreign currencies

Tax incentives

• 8 years CIT exemption only applicable to income derived from promoted services 
• Maximum CIT amount is capped at:
  • 100 percent of salaries expenses of Thais working in IT whom have been employed after the filing of the application;
  • 200 percent of the training expenses for developing skills of Thais employees and the course of such training relates to the development of technology information;
  • 200 percent of the human resources development under the collaborated project with the educational institutes as regulated by BOI e.g. Work-Integrated Learning (WiL) Project, or cooperation for development of Thais employees on technology information as approved by BOI. However, this incentive shall not be granted if a BOI applicant apply for incentives under the Investment Promotion Measure in EEC for human resources development.);
  • 100 percent of expenses for obtaining the standard quality certification of ISO 29110 or CMMI (level 2 or more) or other universal standard;
• Exemption on withholding tax paid to shareholders from tax exempted profits;
• Exemption on import duties on raw materials used in production for export;
• Exemption on import duties on raw materials used in R&D;
• Exemption on import duties on machinery.

General IT consulting services are not covered by the promotion. Overall, it seems that the development of software, platforms and digital content is the key criterion for approval. Adjusting software (for example integration) seems not to be sufficient. Thus, companies pursuing the promotion should have a development team in Thailand on the ground. General IT consulting services could be promoted under a Trade and Investment Support Office depending on the specific circumstances of the case.