What is the BOI?
Most of us are already aware that Thailand is a great place for a holiday and a great place to live but the question that many people ask is “What is Thailand like for doing business?”.
The answer to the question is “good” and this is definitely the case if you setup up a Board of Investment (BOI) company which presents even more opportunities.
What is a BOI registered company?
Setting up a company in Thailand can be quite complex. There are a number of restrictions placed upon foreigners designed to stop them competing with Thais for local jobs. However, Thailand has recognised the need to foreign investment and foreign assistance in order to compete with more established countries such as Singapore and Hong Kong. They have therefore set up the BOI which has its own rules designed to promote businesses operating in key sectors.
One major difference is the fact that businesses can be 100% foreign owned which offers a number of advantages, not least allowing businesses to make the most of the tax incentives. Of course, thanks to the relatively low cost of land and labour, operating costs should be lower than those in some other countries in the region.
So, what are the other benefits of becoming BOI registered?
Along with having special dispensation to be 100% foreign owned, companies may be eligible for tax relief which could amount to paying 0% tax for 8 years. This is dependent on the sector in which you operate and the location of your business. Another huge advantage is the fact that it is possible to have more work permits than traditional Thai Limited Companies. This allows businesses to employee fewer Thais per work permit and therefore bring in more skilled labour from overseas.
Companies that are working in industry can also import machinery without being forced to pay VAT, which therefore allows superior quality, machinery to be used without being exposed to excessive taxation. If your company is heavily involved with research and development, it is also possible to get an additional three years tax relief, so long as that research is seen to be to the benefit of Thailand and its people.
Of course, it would be unrealistic for the BOI to expect companies to start trading in Thailand without conducting the necessary research. A special visa is available allowing individuals to conduct a “Feasibility Study” rather than having the need to obtain the standard Non-Immigrant B visa. To obtain this visa you must follow the process outlined below:
• The company must be incorporated and have already obtained BOI approval
• The company should provide the individual with a cover letter explaining the purpose of the application, as well as supplying details of the individual’s current visa status (if applicable)
• This information should then be submitted to the Immigration Department by a nominated person within the company (this can only be one person who must continue the process until the end)
• This is a new visa so some officers may be unaware of it, so taking information about it with you is advisable
• The visa should take a day to process although it frequently takes longer
• The cost is THB30,000 and can be extended to a multi-year visa upon BOI approval
What is the process of applying for BOI approval?
Preparing for the Application
The initial application only requires relatively basic information such as the number of employees and basic financial projections. Evidence will be needed to support your projections and the application form, which is around 8 pages long, needs to be completed in a specified manner which, at first glance, can seem a little daunting although it doesn’t need to be. The initial application process will take anywhere from three to six months to complete.
After your paperwork has been submitted you will be invited for an interview at the BOI offices in Bangkok – regardless of where you wish your company to be based. The founders of the company will need to be present and you will need to take along a number of documents that will be inspected during the interview (it is advisable to employ the services of an experienced company to assist you with this). All this information should be accurate and you should answer all questions in a truthful manner. If you imagine how you would present a business plan to a bank, you won’t be far wrong.
As with any Thai company, the company must have three promoters for a private limited company or 12 promoters for a public limited company. The promoters should be over 20 years of age and must be registered and available for signing documents throughout the entire application process. They should also be initial shareholders immediately after registration. After the promotion has been completed the shares can be transferred to other individuals.
The Registration of Company Name
You will be required to offer three suggestions for the company name and the registrar can reject names if they don’t match certain criteria or they are already in use.
Memorandum of Association (MOA) Registration
The MOA must include the following (the same as for a private limited company):
• The full name of the company
• The location where the premises will be based
• The purpose of business
• The registered share capital
• Names of promoters
Once the company has submitted the MOA and gained BOI approval, the company will need to be registered. All government fees and 25% of the share capital must be fully paid up. The company may be required to register more share capital depending on the number of foreign workers that are employed.
Foreign Business License (FBL) Application
Before commencing operations, the company will be required to obtain a FBL if it matches the definition of a foreign company according to the Foreign Business Act. Unfortunately, this is another time consuming process and one that is best done with the assistance of a professional company.
It should be noted that there are some restrictions that prevent a business from being fully foreign owned. These include, but are not restricted to, the following:
• Agriculture – Plant propagation and development
• Mining – Mineral ore prospecting
• Mining – Mineral or ore dressing
• Mining – Marble or Granite
• Manufacturing – 4 stroke motorcycles
• Service and Public Utilities – Limited to international trading companies.