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Thailand is rich in natural resources, stable in politics and good in social order, and encourages foreign investment.
Investment authorities and investment laws and regulations
The government agency responsible for promoting investment in Thailand is the Investment Committee (BOI). Although Thailand began to promote investment more than 30 years ago, it was not until 1977 that the laws and regulations on investment incentives were officially promulgated. The committee is composed of the State Council, relevant ministers of economic affairs, senior government officials, representatives of important private institutions and members of the association. The daily investment promotion work is specifically responsible for the subordinate institutions of the Investment Committee.
BOI promotes various projects, the main purpose of which is to use local resources to promote industrial and technological development in Thailand, increase employment, earn foreign exchange, develop economic development outside Bangkok, protect natural resources and reduce environmental pollution.
BOI has the right to provide various rewards and guarantees if each investment plan meets the national economic development goals.
In addition to investment incentives, BOI also provides relevant business services for investors. These services include helping investors obtain investment licenses or permits.
Its investment laws and regulations mainly include: civil and commercial unification law, regulations on foreign occupation control, factory registration law, labor law, property law, investment promotion law, tax law and so on.
Types of company establishment and taxation
There are three types of companies in Thailand: sole proprietorship, partnership and limited company. However, foreigners can also engage in limited business activities in the form of branches and representative offices of foreign companies.
1. Sole proprietorship: an unincorporated organization owned by individuals.
2. Partnership: General partnership: This type of cooperation is a legal person organization, which is obviously different from the partners after registration, so the taxation method is regarded as a company organization.
3. Limited company: The number of shareholders and promoters shall not be less than 7, and it is not allowed to publicly issue stocks and bonds. Directors and supervisors are not necessarily shareholders.
4. Branches of foreign companies: Foreign companies can set up branches in Thailand, and they must remit working capital to Thailand within the time limit.
5. Representative offices of foreign companies: Foreign companies can set up representative offices in Thailand to engage in non-profit activities.
Taxes include: enterprise income tax, which is levied on the income (net profit) obtained from Thailand and abroad by companies established in accordance with the Thai company law, with a tax rate of 30%; VAT business tax: foreigners who stay in Thailand for more than 180 days each year need to declare, and the tax rate is 5% to 37%; VAT business tax: sales of all kinds of goods and services, the tax rate is 7%. Tariff: levied according to a specific quantity or ad valorem of tariff; Stamp duty: levied according to the performance of stamp duty; Dividend income tax: the tax rate is 10%.
Investment incentive measures
Thailand's preferential investment policy is based on the principle that the government spreads Thai industry to remote areas. In order to narrow the gap between urban and rural areas and achieve the goal of balanced development, the government encourages investment in remote areas.
BOI divides the whole country into three preferential investment zones, and the preferential policies enjoyed by preferential industries in these three zones are mainly to reduce taxes and fees and reduce the investment cost of infrastructure.
Area 1: Bangkok, Berlin Building, Longzaicuo Building, Baton Thani Building, Wenbuli Building and Buddhism Building.
The second constituency: Yegongfu, Zhupi, Beibi, Pan Su, Hong Tong, Ayutthaya, Beibiao, Kunxiyu, Beiliu and ChunLi Wu provinces.
The third district: including the remaining 60 provinces and Lianchawan Industrial Zone.
Guarantee matters
Promise not to nationalize the invested enterprise. Ensure that similar utilities will not be created to increase competition. Ensure that monopoly measures are not implemented for the types of products produced by investment enterprises. Promise not to take price control. Ensure that products are allowed to be exported. Ensure that government agencies or public utilities will not import similar products duty-free.
Protective measures (the following protective measures can be taken as required)
For a period of not more than one year at a time, the same kind of imported foreign goods shall be taxed, but the maximum amount shall not exceed 50% of the CIF price of foreign goods. It is forbidden to import foreign goods that will constitute serious competition. The chairman of the investment authority has the full right to order special assistance or tax reduction and other measures to protect the rights and interests of investment enterprises.
Allowed items
Allow foreigners to come to Thailand for investment feasibility study. Foreign technicians or experts are allowed to participate in the work under the investment plan of Thailand. It is allowed to hold the real estate required for the investment plan. Permission to hold or remit foreign exchange.
Tax burden preference
Import tariffs on imported machinery are exempted or reduced by 50%. Reduce import tariffs on imported raw materials and spare parts within 90% as appropriate; For domestic production enterprises that invest in raw materials and spare parts for the project, business tax shall be reduced or exempted within 90% as appropriate. Enterprise income tax shall be exempted for 3 to 8 years, and losses shall be allowed to be deducted as expenses within 5 years. During the period of exemption from income tax, the dividends shared by the shareholders of the company can be deducted from the taxable income.
Special concessions in investment preferential zones
The company can still get 50% income tax relief within 5 years after the expiration of the quasi-exemption from enterprise income tax. Companies that are not exempt from income tax will also receive this preferential treatment within five years from the first day of income generation. It is authorized to double the cost of transportation, water and electricity to offset its taxable income. Within 65,438+00 years from the date of income, the cost of infrastructure investment can be deducted from the taxable income of the company, but the maximum amount shall not exceed 25% of the cost.
Preferential treatment for export enterprises
Imported raw materials and accessories are exempt from import duties. Goods imported for re-export purposes are exempt from import duties. Exempt from export tax. Deduct 5% of the export increment in the current year from the taxable income of the company, which excludes insurance premium and freight.
Investment restriction
1. restrictions on the proportion of foreign investment: except for the manufacturing industry, which allows foreigners to own 100% of the shares, the proportion of foreign investment in agriculture, animal husbandry, fisheries and mining shall not exceed 49%. With an investment of more than 65,438 billion baht, although foreign investors can own more than 5 1% of the shares in the first five years, from the sixth year, Thai capital needs to exceed 5 1%.
2. Enterprises prohibited from foreign investment:
Agriculture: rice cultivation.
Commerce: domestic sales of local agricultural products and land sale.
Services: accountant, lawyer, architect, advertising, distribution agent, auction and hairdressing.
Others: construction industry.
Investment application procedures and audit procedures
Investors who are interested in applying for preferential incentive policies can get the application form from the Investment Service Center of the Investment Committee (this form is free). After submitting two complete application forms, within two weeks, the applicant and Committee officials will make an appointment to answer the specific matters of the applied project. Once all the documents are ready, the Committee will review the contents of the application and inform investors whether their application has been approved or whether detailed documents need to be submitted. The examination and approval time for investments with an investment of less than 200 million baht (about 5 million US dollars) shall not exceed 60 working days, and for investments with an investment of more than 200 million baht, the examination and approval time shall not exceed 90 working days. Once approved, the Committee will inform investors within 15 days, detailing the relevant conditions and rewards enjoyed. This notice includes an application form for approving the incentive card. Within 10 days after receiving the documents, the committee will issue the award certificate.
The company must be established within 6 months after receiving the incentive certificate. Within 24 months, the company must import equipment to enjoy preferential tariffs. Within 30 months, the factory was completed, the equipment was installed and the factory began to operate. Notify the Committee 15 days before the work starts to run, so that the Committee can check the equipment and issue a formal production license. The company needs to provide the Committee with a report on the operation of the factory every six months, and submit financial statements and work reports to the Committee before June 30 every year, so that the Committee can decide whether to extend its preferential conditions.
Procedures for applying for land ownership
1. Companies with preferential incentives, 50% or more of which are owned by foreigners, can apply for land ownership according to Section 27 of the Investment Promotion Law, submit appropriate documents, and attach land location map, architectural design and land ownership certificate to BOI.
2.BOI will approve the land area and send the approval letter to the applicant. If the land is located in Bangkok, BOI will notify the Bureau of Land and Resources, and if the land is located in other counties and cities, BOI will notify the relevant government officials.
3. In order to obtain the land after receiving the approval letter, the winner of the preferential award must contact the land office in the area where the land is located and show the preferential award certificate.
4. If the enterprise with preferential incentives is finally dissolved, BOI must be informed and the land must be sold within one year after dissolution.
If the company enjoying preferential reward wants to transfer its enterprise to another company with more than half of the shares owned by foreigners, the company enjoying preferential reward must obtain BOI's permission in advance.
6. The approved land must be used for activities with preferential incentives.