With its growing economy, Thailand is becoming a hotspot for company registration. Whether it is to take advantage of its trade opportunities or to relocate to its appealing warm and sunny climate, there are several ways to register your company.
This article will act as your starting point when looking into how to establish a BOI company in Thailand and will cover the considerations that you will need to take into account when deciding to register this type of company.
How is a BOI company different than other types of business registration in Thailand?
What is a BOI company?
The Thailand Board of Investment (BOI) is a government entity that has a primary focus on encouraging foreign investments in the Thai market. A company that is promoted by this government body is therefore referred to as a BOI company in Thailand.
After registering a Thai-majority company (which gives up to 49% foreign ownership), it is possible to apply for approval from the Board of Investments to transition into a BOI company. BOI-promoted companies can enjoy up to 100% foreign ownership, depending on the type of industry and which privileges have been granted by the board. Privileges include:
- Possibility to own land (for promoted activities)
- Unlimited hire of foreign skilled workers and experts (no foreigner to Thai employee ratio)
- Simplified visa and work permit procedures
- Exemption on import duty on machinery and raw materials
- Up to 8 years of Corporate Income Tax holidays (only for some BOI categories)
If you are considering registering a company in Thailand, it could be beneficial for you to weigh the option of a BOI company in Thailand versus some of the other types of entities you can register. For a more global view of foreign-owned company registration in Thailand, be sure to read this article.
Eligible business activities
Multiple factors will be considered by the BOI before a company is approved to be promoted by the Board. Most importantly, only some business activities are eligible to apply for board approval. There are four main categories of eligible business activities for promotion:
- Agricultural, Food, Biotechnology, and Medical industries
- Machinery, Automotive, Electrical Appliances and Electronics industries
- Metal, Material, Chemical and Petrochemical industries, and Public Utilities
- Digital, Creative industries, and High-Value Services
Eligibility criteria for approval of BOI company in Thailand
If your activities are among those listed above, your company will also be subject to the following eligibility criteria for BOI approval:
- Project added-value must not be less than 20% of revenues (10% for certain activities)
- Modern production or servicing processes must be per board approval
- New machinery must be used
- Projects with investment capital of 10 million baht or more must obtain ISO 9000 or ISO 14000 certification or similar international certification
- Environmental protection guidelines and impact assessments must be in place and followed
- Minimum capital investment of 1 million baht per project (unless otherwise specified in the list of eligible activities)
- The debt-to-equity ratio must not exceed 3 to 1 for new projects.
- Projects with investment values of over 2,000 million baht must submit a feasibility study
If you think your company meets the eligibility criteria, it is advised to dive a little deeper into the Thailand Board of Investment’s detailed Investment Proposal Guide.
Important factors to consider when choosing a BOI company in Thailand
Pros of running a BOI company
Running a BOI in Thailand is considered a very appealing option for many foreign investors. Here are some of the main advantages related to BOI companies:
- 100% foreign ownership: Foreign investors who are granted BOI promotion are allowed to own 100% of their company in Thailand, which is not possible under normal circumstances. This gives foreign investors full control over their business and makes it easier to raise capital from overseas investors.
- Tax and non-tax incentives: BOI-promoted companies are eligible for a variety of tax and non-tax incentives, such as corporate income tax exemption, import duty exemption on machinery and equipment, and work permits for foreign employees.
- Government support: BOI-promoted companies receive support from the Thai government in several ways, such as assistance with obtaining visas and work permits, and access to government resources and information.
Cons of running a BOI company
The aforementioned pros of BOI can be very appealing to foreign investors looking to develop their business in Thailand. It is important, however, to keep in mind that the process also comes with some downsides:
- Application process: The BOI application process can be complex and time-consuming. Companies must meet the necessary criteria to be eligible for promotion, and the application process can take several months to complete.
- Investment requirements: BOI-promoted companies are required to make a minimum investment in Thailand, which can be a significant barrier to entry for some foreign investors.
- Performance requirements: BOI-promoted companies must meet certain performance requirements, such as export targets and job creation targets. Failure to meet these requirements could result in the withdrawal of BOI promotion.
When comparing the benefits and drawbacks, it can be surmised that the pros outweigh the cons for many foreign investors But this can only be determined on a case-by-case basis depending on your business needs and economic situation.
Additional considerations for a BOI company in Thailand
Even if a company meets all of the eligibility criteria, there is no guarantee that it will be granted BOI promotion. The BOI has the discretion to approve or reject applications based on several factors, such as the company’s investment plan, its potential impact on the Thai economy, and the industry in which it operates.
BOI promotion is also not permanent: it is typically granted for 5-10 years, and it may be extended for an additional period. However, the board can withdraw promotion if a company fails to meet its performance requirements.
It is best practice for foreign investors who are considering applying for a BOI company in Thailand to consult with an experienced business advisor or lawyer to get help with the application process and to ensure that the company’s investment plan meets the BOI’s requirements.
How do I register a BOI company in Thailand?
BOI Registration process
The process for applying for BOI approval can be lengthy. The approximate timeframe for setting up a BOI company in Thailand is 2-3 months. The project analysis process is determined primarily by the investment capital, ranging from 40 working days for capital equal to or less than 200 million baht to 90 working days for capital exceeding 2,000 million baht.
You will need to ensure that you submit all the required application documents and company-specific requirements, such as proposals, environmental impact assessments, feasibility studies, etc. Keep in mind that the required documents will vary depending on the company’s business activity type.
It is important to consider all the requirements and to be thoroughly prepared before beginning the application process. There are many benefits to BOI companies, but the process is complex, and mistakes or missing information can complicate things further.
A simpler approach to setting up in Thailand
If you are a foreign investor and you are interested in applying for a BOI company in Thailand, consider consulting with professionals who are familiar with the market. Emerhub has over 10 years of experience in helping companies establish and expand their companies in emerging markets.
We can simplify the process of business registration by providing you with expert market-specific advice. Our team will also ensure that your BOI registration is done correctly and to avoid delays. Schedule a consultation today and we’ll put you in touch with one of our top local advisors!