Executive summary

Consistent with the repeal of the International Headquarters (IHQ) and International Trading Center (ITC) regimes and the introduction of the International Business Centers (IBC) regime by the Thai Revenue Department, the Thai Board of Investment (BOI) approved the new IBC policy to replace its investment promotion policies for the IHQ and the ITC.

As with the previous IHQ and ITC regimes, the BOI will grant only non-tax incentives to entities operating as an IBC.

Main changes are as follows:

• An IBC cannot operate a trading business as a sole business and therefore must also provide one of the qualifying services.
• An IBC must employ at least 10 skilled employees,¹ or 5 skilled employees if providing only Treasury Center (TC) services.
• An IBC is not entitled to import duty exemptions on importation of raw materials or essential materials used in manufacturing of goods for export purposes.

Detailed discussion

Key qualifying criteria and privileges of a new IBC are as follows:

Qualifying services

1. General business management, business planning, and business coordination
2. Procurement of raw materials and parts
3. Research and development (R&D) of products
4. Technical support
5. Marketing and sales promotion
6. Human resources management and training
7. Financial advisory services
8. Economic and investment analysis and research
9. Credit control and management
10. TC activities
11. ITC activities
12. Any other business announced by the Revenue Department

Criteria

• Must provide at least one of the qualifying services to associated enterprises (but for ITC, see below)
• Must have registered and paid-up capital of at least THB10 million (US$310k)
• Must employ at least 10 skilled employees, or 5 skilled employees if only providing TC services
• If engaged in an ITC business, must also carry out at least one of the qualifying services listed above from 1 to 10
• Not entitled to import duty exemption on raw materials or essential materials used in manufacturing of goods for export purposes
• Not entitled to apply for merit-based incentives

Privileges

• Import duty exemption on machinery used for R&D and training activities
• Eligible for a 100% foreign ownership
• Permitted for foreign-majority-owned companies to own land for BOI activities
• Relaxation on the number of allowed foreigners for visa and work permit purposes

Endnote

1. Knowledgeable and experienced employees.

For additional information with respect to this Alert, please contact the following:

EY Corporate Services Limited, Bangkok

• Yupa Wichitkraisorn | yupa.wichitkraisorn@th.ey.com
• Pathira Lam-ubol | pathira.lam-ubol@th.ey.com
• Su San Leong | su-san.leong@th.ey.com

Ernst & Young LLP, Thai Tax Desk, New York

• Sarunya Sutiklang-viharn | sarunya.sutiklang-viharn1@ey.com

Ernst & Young LLP, Asia Pacific Business Group, New York

• Chris Finnerty | chris.finnerty1@ey.com
• Kaz Parsch | kazuyo.parsch@ey.com
• Bee-Khun Yap | bee-khun.yap@ey.com

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