Announcement of the Board of Investment

May 2, 2020 | Legal News Letter

In this issue, we provide to our clients up-to-date information and details regarding new regulations on one of eligible activities promoted by the Board of Investment. On March 2020, the Board of Investment decided to set the new criteria, conditions, and incentives for the hotel activity to attract more investors to invest and support tourism in Thailand by announcing the Announcement of the Board of Investment No. Sor. 2/2563 (2020) RE: The Amendment of List of Activities Eligible for Investment Promotion according to Announcement of the Board of Investment No. 2 /2557 (2014).

Announcement of the Board of Investment No. Sor. 2/2563 (2020)
RE: The Amendment of List of Activities Eligible for Investment Promotion according to Announcement of the Board of Investment No. 2 /2557 (2014).

As mentioned above, on 11th March 2020, the Board of Investment announced the Announcement of Board of Investment No. Sor. 2/2563 (2020) RE: The Amendment of List of Activities Eligible for Investment Promotion according to Announcement of the Board of Investment No. 2 /2557 (2014) (“Announcement”) which has been in effect since 6th February 2020. The purpose of this Announcement is to introduce new options for hotel activity to attract more investors to invest in hotel business in Thailand. The new criteria, conditions and incentives are clearer, more applicable and flexible to the investors than the old one. For better understanding, we have summarized and compared the difference between the old regulations and the new regulations under the Announcement, as follows:

Comparison of Criteria and Conditions for Hotel Activity

Old Criteria and Conditions

New Criteria and Conditions
  1. Condition on amount of Investment
    Each hotel must have at least 100 rooms or a minimum investment (excluding cost of land and working capital) of not less than 500 million baht.
  1. Condition on Location
    The incentives of the promoted hotel will be based on the location of the hotel as follows:

2.1 Promoted hotel located in one of the following 20 special investment promotion provinces:

– Amnatcharoen Province  – BuengKan Province
– Buri Ram Province -Chaiyaphum Province
– Kalasin Province  – Mae Hong Son Province
– MahaSarakham Province -Mukdahan Province
– Nakhon Phanom Province   – Nan Province
– Nong Bua LamphuProvince – Phrae Province
– Roi Et Province   -Sakhon Nakhon Province
– Sa Kaew Province  – Si Sa Ket Province
-Sukhothai Province  -Surin Province
– UbonRatchatani Province – Yasothon

2.2 Promoted hotel in other provinces.
  1. Condition on amount of Investment
    1.1 In case having at least 100 rooms, the minimum investment per room (excluding cost of land and working capital) must not be less than 2 million baht; or

1.2 In case having less than 100 rooms, the minimum investment (excluding cost of land and working capital) must not be less than 500 million baht.

  1. Condition on Location
    The incentives of the promoted hotel will be based on the location of the hotel as follows:2.1 Promoted hotel located in one of following 22 provinces:

– Bangkok Metropolis – Chachoengsao Province
– Chiangmai Province – Chonburi Province
– Kanchanaburi Province    – KhonKaen Province
– Krabi Province    – Nakhon Pathom Province
– Nakhon Ratchasima Province – Nonthaburi Province
– Pathum Thani Province   – Phang Nga Province
– Phetchaburi Province -Prachuap Khiri Khan Province
– Phra Nakhon Si Ayutthaya Province
– Phuket Province – Rayong Province
– Saraburi Province    -SamutPrakan Province
-SamutSakhon Province    – Songkhla Province
– Surat Thani Province 

2.2. Promoted hotel in other provinces.

Comparison of Incentives for Hotel Activity

Old Incentives

New Incentives
  1. The promoted hotels located in one of 20 special investment promotion provinces in 2.1 above

These hotels will receive basic A4 incentive with additional incentives due to merit-based incentives which can be explained as follows:

1.1 A 3-year plus additional 3-yearcorporate income tax exemption, in total 6-year corporate income tax exemption;

1.2 Double deductions from the costs of transportation, electricity and water supply for 10 years;

1.3 Additional 25% deduction of the cost of installation or construction of facilities;

1.4Exemption of import duty on machinery;

1.5Exemption ofimport duties onraw materialsused in productionfor export; and

1.6 Other non-tax incentives which are:

  • Permit for foreign nationals to enter into Thailand for the purpose of studying investment opportunities;
  • Permit to bring into Thailandskilled workers and experts to work ininvestment promoted activities;
  • Permit to own land; and
  • Permit to take out or remit moneyabroad in foreign currency 

2. The promoted hotels located in other provinces

These hotels will receive basic B2 incentive which can be explained as follows:
2.1 Exemption ofimport duties onraw materialsused in productionfor export; and
2.2 Other non-tax incentives which are:
• Permit for foreign nationals to enter into Thailand for the purpose of studying investment opportunities;
• Permit to bring into Thailandskilled workers and experts to work ininvestment promoted activities;
• Permit to own land; and
• Permit to take out or remit moneyabroad in foreign currency.
  1. The promoted hotels located in one of 22 provincesin 2.1 above

These hotels will receive basic B2 incentive which can be explained as follows:

1.1 Exemption ofimport duties onraw materialsused in productionfor export; and

1.2 Other non-tax incentives which are:

  • Permit for foreign nationals to enter into Thailand for the purpose of studying investment opportunities;
  • Permit to bring into Thailandskilled workers and experts to work ininvestment promoted activities;
  • Permit to own land; and
  • Permit to take out or remit moneyabroad in foreign currency. 
  1. The promoted hotels located in other provinces

These hotels will receive basic A4 incentive which can be explained as follows:

2.1 A 3-year corporate income tax exemption;

2.2Exemption of import duty on machinery;

2.3 Exemption ofimport duties onraw materialsused in productionfor export; and

2.4 Other non-tax incentives which are:

Permit for foreign nationals to enter into Thailand for the purpose of studying investment opportunities;

• Permit to bring into Thailandskilled workers and experts to work ininvestment promoted activities;
• Permit to own land; and
• Permit to take out or remit money abroad in foreign currency

 

In conclusion, these new regulations areintroduced and implemented to provide more incentives to the promoted hotels in more provincesand also to clarify on the criteria and conditions of the hotel activity. However, theadditional incentives due to merit-based incentives has been removed from the new regulations.

Mr. Wichien Harnpraween
Managing Partner
Tel:+662 2592627 thru 9
Fax: +662 2592630