Thailand Issues New COVID-19 Stimulus Package to Accelerate Investments
- Thailand’s Board of Investment issued its latest stimulus package to accelerate foreign investments in the country.
- The latest package provides corporate income tax (CIT) deductions for selected BOI-approved investments as well as CIT exemptions for businesses seeking to adopt digital technology.
- Businesses can apply between January 4, 2021, to December 30, 2021, for the CIT deductions.
- The government has also created a new economic zone in the Eastern Economic Corridor (EEC) for investments in genomic technology.
On December 21, 2020, the Thailand Board of Investment (BOI) — the main agency responsible for promoting foreign investments in Thailand — issued its latest stimulus package to accelerate foreign investments into the country.This latest package provides additional tax incentives, such as corporate income tax (CIT) deductions for large-scale projects and for businesses seeking to adopt digital technologies in their operations. Furthermore, the government has granted the establishment of a new economic zone to support the development of Thailand’s genomics industry.
Thailand has issued three major stimulus packages (Phase 1, 2, and 3) in 2020 in response to the economic fallout of the pandemic, totaling over US$30 billion. These packages focused on providing soft loans for small and medium-sized enterprises (SMEs), tax exemptions, and cash handouts to certain workers. In addition, the government issued some US$700 million in incentives to help the struggling tourism industry, which accounts for 20 percent of GDP.
Corporate income tax deductions
Projects in selected industries with investments worth at least 1 billion baht (US$33 million), will be eligible for a CIT deduction of 50 percent on profits generated from existing BOI projects for a period of five years. This is calculated on top of the standard five to eight years CIT exemptions offered under the normal BOI tax-incentive.
The realized investments must be implemented within 12-months from the issuance of the BOI promotion certificate. Further, eligible projects need to apply between January 4, 2021, to December 30, 2021.
Support for the digital economy
Businesses that are in the process of adopting digital technology in their operations can also benefit from a 50 percent CIT exemption on profits for an additional three years. This includes the utilization of software integration, artificial intelligence, big data analytics, or machine learning programs.
Applications must be submitted by the end of 2022.
New economic zones for the genomic industry
The BOI has granted the Genomics Thailand project, located at the Burapha University in the Eastern Economic Corridor (EEC), the equivalent status as other economic zones in the EEC. This means investors in the new genomic economic zone will be eligible for the same BOI tax incentives as in other EEC investments.
Thailand’s genomics technology industry, ranging from cancer detection, in-vitro fertilization (IVF), and the development of vaccines and biological products, is expected to be worth US$2.3 billion annually. The country is facing competition from its ASEAN neighbor Malaysia in the field of IVF treatment, which has an average of 55 to 60 percent success rate in the country.
The government is pushing Thailand’s medical industry to be a major contributor to the economy. The country is home to several Joint Commission International (JCI) accredited healthcare centers and has been accredited as among the top five destinations for inbound medical tourism spending globally, according to the World Travel & Tourism Council (WTTC).
Deadline extension for incentive schemes in SEZs
The BOI has extended the deadline for businesses seeking to apply for incentives provided in Thailand’s 10 SEZs, until the end of 2022. Thailand’s special economic zones are located along its borders with Cambodia, Laos, Myanmar, and Malaysia – in the provinces of Chiang Rai, Kanchanaburi, Mukdahan, Nakhon Phanom, Narathiwat, Nong Khai, Sa Kaeo, Songkhla, Tak, and Trat.
Moreover, the application deadline for investment projects in the country’s southernmost provinces of Narathiwat, Pattani, Satun, Songkhla, and Yala has been extended by two years until 2022. These regions have been granted special tax incentives, such as eight-year CIT tax holidays as well as an additional 50 percent CIT reduction for the following five years.