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BOI promotion for software:
Why is Thailand a good destination for software development companies?
Thailand has made itself an attractive option for software development companies looking for a place to establish their company. The attractiveness of Thailand stems from the availability of receiving a promotion from the Thailand Board of Investments (BOI). A promotion from the BOI comes with a lot of highly attractive benefits such as 100% foreign ownership, tax breaks and work permits for foreign workers.
Another appealing feature of the BOI promotion for software development companies is the relatively low application requirements and audit requirements. As it stands, you only need an initial capital deposit of 1 million THB and there is no strong audit during the first years of operation.
What kind of digital services and software platforms are eligible for BOI promotion?
The BOI has established the following activities as being eligible to receive a promotion:
- The Development of games, software or applications (BOI Activity 5.7.2 – Enterprise software and/or digital content.
- Development of an online platform that will charge commission based on the transactions made (Activity 5.8 – E-commerce).
- Development of a software platform where there are at least 3 parties involved (Activity 5.9 – Digital Services).
The BOI offers numerous incentives and benefits for businesses who operate within these fields and the rapidly expanding digital services industry. Examples of the types of business operations covered include:
- Software platforms
- Managed services
- Digital architecture design services
- Digital services such as FinTech, DigiTech, MedTech, AgriTech, etc.
What are the conditions that must be satisfied by software platforms in order to receive a BOI promotion?
In order for your company to receive BOI approval your company must satisfy the following conditions:
- The company must hire digital specialists
- The company must be in possession of a capital investment sum of no less than 1,000,000 THB.
- Any company with an investment of 10 million THB or more (excluding cost of land and working capital) must have obtained an ISO 20000 certification (or other quality standard certificate which has been approved by the Ministry of Information and Communication Technology) within 2 years from the operational start date. If the company is not in possession of an ISO 20000 (or equivalent) certificate, the corporate income tax exemption shall be reduced by 1 year.
- Revenue derived from sales or the provision of services that are directly related to a promoted digital service business shall be regarded as revenue of such promoted business.
- Activities relating to 5.7.2 – Enterprise software and/or digital content, has the stipulation that you must spend 1.5 million THB in IT personnel salaries per year.
What are the advantages of receiving a BOI promotion for software development?
If you receive approval for your company from the BOI you will be eligible for the following benefits:
- Corporate income tax exemption for 5 years.
- Exemption of import duties on new machinery.
- Exemption of import duties on raw materials used in production for export.
- 100% foreign ownership.
- Permit to own land.
- Relaxed rules for obtaining a work permit and Visa for foreign skilled employees (there is no minimum ratio of Thai employees and minimum capital requirement for foreign employees unlike a traditional Thai Company).
Please note that BOI promotions awarded under category 5.8 – E-commerce, do not receive any tax benefits. However, much like the other promotions, you can still offer work permits for your foreign employees and have 100% foreign ownership.
Conclusion
Thailand is placing a heavy emphasis on digital software development as part of its efforts to diversify its economy. This emphasis has opened many opportunities for digital companies to take advantage of.
If you want more information on the process to apply for a BOI Promotion, please follow this link.
Please note that this article is for information purposes only and does not constitute legal advice.
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