Originally, the Investment Promotion Act B.E. 2520 (A.D. 1977) (“the Investment Promotion Act”) was enacted because the economic situation in Thailand was affected by a world economic crisis. Under the Investment Promotion Act, a board of investment (the “BOI”) was established to promote both foreign and Thai investment by providing tax and non-tax incentives. The Investment Promotion Act has been amended from time to time since its enactment to make it appropriate to changing global and domestic economic situations.

The Investment Promotion Act (No. 4) B.E. 2560 was publicized in the Royal Gazette on 24 January 2017 and became effective on 25 January 2017. The amendments will affect any persons applying for the BOI promotion after 25 January 2017 as follows:

(1) The requirements of (i) minimum domestic raw materials used in BOI promoted projects and (ii) the minimum exportation of products, will no longer apply.

(2) Additional import duty exemption will be provided for materials imported for the purpose of research and development and relevant testing under further conditions to be prescribed by the BOI.

(3) A maximum of 30 years corporate income tax exemption will be provided for any projects using advanced technology and innovation or any research and development project under further conditions to be prescribed by the BOI. Such projects are also eligible to carry any loss for deduction with profits for any of the following five years.

(4) A maximum of 70% of expenses incurred from the promoted activities can be used for deduction for corporate income tax purposes, in addition to normal depreciation values, for any project without corporate income tax deduction or exemption benefits. Such projects may choose to carry such expenses for deduction with profits for any of the following ten years from the first date of receiving income from the BOI project.

(5) Shareholders of a company receiving corporate income tax exemption are not subject to income tax for dividends paid from profits of the promoted activities during the corporate income tax exemption period and within 6 months from the expiration of the corporate income tax exemption period.

(6) The BOI may grant corporate income tax deductions of not more than 50% of the normal corporate income tax rate for a period no longer than 10 years for any projects which are not eligible for corporate income tax exemption.

(7) Export privileges are revised as follows:

(i) Exemption of import duties for raw and essential materials used in manufacturing export products;

(ii) Exemption of import duties on re-export items; and

(iii) Exemption of export duties on products produced or assembled by BOI promoted projects.