Businesses without a factory use a different test
Manufacturing is measured by investment and machinery, but a software or service business has people as its main asset, so BOI applies different criteria. Many digital and service activity types use annual payroll instead of a minimum investment amount, and the tax exemption cap is tied to personnel expenses instead of machinery costs.
What is the same as for factories is the principle that the business must be named on the list of activity types. An overview of the list and the incentive groups is in the guide to businesses eligible for BOI.
Software, digital platforms and digital content (Item 8.1.1)
This is the activity type technology companies use most. It receives Group A2 incentives: an 8-year corporate income tax exemption within a set cap. The main conditions are:
- Minimum wages: at least THB 1.5 million per year in wages for additional or temporary Thai-national information technology personnel
- Development in Thailand: not the resale of software developed abroad
- Retail and wholesale excluded: acting as a sales agent for other people's licenses is outside the scope
- Fully operational within 12 months: no extension is possible, which is much shorter than for ordinary projects
- Used machinery or equipment may be used, and land may be owned
The tax exemption cap is calculated from three kinds of actual expenses: wages of additional or temporary Thai IT personnel, IT training costs, and the cost of the first certification to ISO 29110 or CMMI level 2. The cap therefore grows with the Thai staff the company actually hires and develops.
The exempt income must be income from selling or providing software, digital platforms or digital content as BOI defines them. The company's other income, such as hardware sales, installation work or resale of other people's products, is not exempt. Keep separate accounts from the start.
Data centers and cloud services (Item 8.2)
Data centers (Item 8.2.1) must have power capacity for IT equipment of at least 2 megawatts, be designed so that maintenance can be done without shutting down the system, meet ISO/IEC 27001, and have Thai staff at senior or expert level of at least 50% within 3 years. The incentive group depends on the energy efficiency conditions in the latest announcement.
Cloud services (Item 8.2.2) must use at least 2 data centers in Thailand certified to ISO 27001, have internet connectivity of at least 10 Gbps with a backup system, and must obtain ISO 27001 and ISO 20000-1 certification before using the corporate income tax exemption.
International business center (IBC, Item 10.1.2)
The IBC replaces the regional operating headquarters (ROH) and the international trading center of the earlier system. It suits corporate groups that want to set up a central hub in Thailand serving their affiliated companies.
- Recipients of the services: affiliated companies or branches, both abroad and in Thailand
- Services: management, technical, support or financial services. Trading, leasing and lending may be done only alongside the main services, not as a stand-alone business.
- Paid-up registered capital: at least THB 10 million
- Skilled employees: at least 10, or 5 if providing treasury management services only
- Incentive Group B: no BOI corporate income tax exemption, with duty exemption only for machinery for research, development and training, but the full set of non-tax incentives: 100% foreign shareholding, land ownership, and bringing in foreign experts to work
An advantage that foreign companies often overlook is licensing. An IBC, IPO and TISO that holds a promotion certificate applies to the Department of Business Development for a Section 12 certificate instead of applying for a foreign business license, which takes longer and has more conditions.
The tax benefits for an IBC do not come from BOI. The reduction of the corporate income tax rate to 8%, 5% or 3% depending on the level of expenses in Thailand, the 15% withholding tax on foreign executives, and the exemption of dividends from affiliated companies come from Royal Decree No. 674 B.E. 2561 (2018) of the Revenue Department. Its conditions are separate from BOI's, and they must be met in every accounting period; in a period that does not meet them, the benefit is not available for that period. Before planning around this benefit, check that it is still open, and consider the effect of the global minimum top-up tax law that has applied to large multinational groups since 2025.
Other services under Category 10 that foreign investors often use
| Activity type | Item | Group | Key condition |
|---|---|---|---|
| Trade and Investment Support Office (TISO) | 10.1.1 | B | Selling and administrative expenses of at least THB 10 million per year |
| International procurement office (IPO) | 10.1.3 | B | Paid-up registered capital of at least THB 10 million |
| Research and development | 10.2 | A1 | As set by the announcement |
| Engineering design | 10.3 | A1 | Thai employees of at least 70% |
| Scientific laboratory | 10.4 | A1 | As set by the announcement |
| Calibration center | 10.5 | A1 | As set by the announcement |
Where foreign companies go wrong
Thinking that with BOI they can do any business. The incentives and the Section 12 certificate cover only the promoted activity. If the company expands into other services, such as general consulting or selling goods, that part must be assessed separately under the Foreign Business Act. The options are compared in the guide to 100% foreign ownership in Thailand.
Failing to hire Thai staff within the 12-month deadline. Item 8.1.1 does not allow an extension of the date by which the project must be fully operational. If Thai hiring has not reached the threshold within 12 months, the project is in trouble from the first year. Plan recruitment before filing the application.
Not separating income. Technology companies often have mixed income, such as license fees, installation fees, hardware and consulting fees. Income outside the scope of the certificate is taxed normally. If it is not separated from the accounting system onward, it is hard to prove later.
Setting up an IBC without looking at the group structure. The recipients of the services must be affiliated companies, and trading must be done alongside the main services. A structure intended to use the IBC mainly for trading will not meet the conditions.
Several founders not agreeing on shares before filing. A startup with several foreign founders should settle the shareholding structure before filing the application. See the guide to multiple foreign founders in a BOI company.
Checklist
- Confirm the activity type, that it is development in Thailand and not resale
- Plan to hire Thai IT personnel up to THB 1.5 million per year within 12 months
- Estimate the tax exemption cap from wages, training costs and certification costs
- Design the accounting system to separate income within the scope of the certificate from other income
- For an IBC, check that the recipients of the services are affiliated companies and that there are real main services
- Check the Revenue Department's tax benefits and the effect of the global minimum top-up tax law separately from BOI
- Identify the business outside the certificate and check whether other licenses are needed
Further reading
- What businesses can apply for BOI
- BOI application steps from filing to receiving the promotion certificate
- After receiving a BOI promotion certificate: conditions to comply with
- Foreign business license for service companies
- Multiple foreign founders in a BOI company
- Service: BOI investment and foreign investor legal advisory
- Service: Company and juristic person registration
