The route is decided before the machinery ships
For most new factories, production machinery is the largest single import of the project. The duty and tax position on it depends on which route it is imported through, and that route has to be in place before the goods arrive.
The practical rule: settle the import route before placing orders.
Three routes compared
| Route | What it gives | Main conditions |
|---|---|---|
| Investment promotion | Import duty exemption on machinery for the promoted project | Promotion granted, machinery matches the project, imported within the permitted period, reporting |
| Free zone | Duty suspended on goods kept and used in the zone | Located in a free zone, zone controls on movement in and out |
| Ordinary import | No special treatment | Duty and taxes paid at import |
These are not exclusive. A promoted project located in a free zone may use both, depending on the goods.
1. Investment promotion: the timing trap
Machinery duty exemption is a privilege of a promoted project.
- It applies to machinery imported after the promotion is in place, through the promotion route
- Imports usually have to happen within a set period after the certificate
- The machinery must match the project as promoted, including capacity and process
- Machinery cleared as an ordinary import before that point generally cannot be brought back into the exemption
So the most expensive mistake is simple: ordering and shipping to a construction timetable, then applying for promotion afterwards.
See living with promotion after approval.
2. Used machinery
Relocating production often means relocating existing machines. Used machinery can qualify, but on conditions.
- Under investment promotion, used machinery may qualify where it meets criteria set by current announcements, typically on age and certification by a recognised institution of efficiency, safety and environmental performance
- Some categories of used equipment may need approval from other authorities
- The criteria have changed over time and special measures sometimes apply to particular relocation programmes, so check the current rules for your machines before purchase or shipment
Keep a machine-by-machine file: year of manufacture, specifications, power rating, inspection certificates, and the value basis.
3. The machinery must match the factory
Machinery decides more than duty.
- Factory class. Total machinery power is one of the facts that decides whether a plant counts as a factory and which class it falls into. A late addition to the list can move the plant into a class with different licensing. See your factory licence in Thailand.
- Approved process. Machines for a process not in the factory licence or the promotion certificate need the licence position addressed first.
- Building and power. Heavy or high-load machines affect floor loading, cranes and electrical capacity.
4. Valuation and related-party purchases
Machinery bought from a parent company or group supplier is a related-party import. The declared value should be supportable, especially for used machines, where value is easier to question. Customs can review import values after clearance. See customs post-clearance audits.
5. What you may not do with exempt machinery
Exempt machinery is tied to the project.
- Selling or transferring it generally needs permission and may trigger duty
- Moving it to another plant or another company in the group needs the same care
- Leasing it out or using it for non-promoted activity creates the same problem
- Keep records that show where each exempt machine is and what it is used for
6. Installation and commissioning
Foreign engineers who install and commission machinery are working in Thailand. Arrange work permits or a permitted route that covers the work before they travel. Supplier contracts should say who arranges and pays for this, and what happens to the schedule if permits are late.
7. Contract terms with the machinery supplier
- Delivery terms that match your import route and timing
- Documentation the supplier must provide for customs, promotion and licensing
- Certification of used machines, and who pays for it
- Installation and commissioning responsibilities, including permits for their staff
- Acceptance testing before final payment
- Warranty that starts at acceptance, not at shipment
Checklist before ordering
- Import route chosen and in place for the timing of shipment
- Machinery list matches the promoted project and the factory licensing plan
- Used machines checked against current criteria, with certification arranged
- Total power and process checked against factory class
- Values supportable, especially for related-party and used machines
- Supplier contract covers documents, certification, installation permits and acceptance
- Records system for exempt machinery set up from day one