02 Aug Investment Incentives for Thailand’s Eastern Economic Corridor
Investment Incentives for Thailand’s Eastern Economic Corridor (EEC)
Three Royal Decrees which amended the Revenue Code came into effect in July 2017. The new tax and other investment incentives provided for the investor include the reduction of rates of some taxes and duties to support the growth of the Eastern Economic Corridor (EEC) or within the three provinces of Chachoengsao, Chonburi, and Rayong. These areas are specially classified as important economic zones in ASEAN and need to attract highly skilled personnel, both Thai and foreign, to work there. The tax benefits are:
1. A personal income tax reduction at the rate of 17%. A qualified taxpayer’s income is exempted from the computation of personal income tax provided that the said taxpayer agrees to pay the withholding tax at the rate 17%.
2. The qualified taxpayer shall waive their right to any tax refund or tax credit incurred from the use of the tax exemption. If the tax payer has received any other types of income such as interest, dividends, or income from business or commerce in addition to their employment income, only employment income is eligible for the 17% withholding rate, the other incomes must be excluded and the rights to any tax refund or tax credit waived.
3. The income earner must be an executive or an expert and possess the qualifications prescribed by the Revenue Department and be an employee of a company or juristic entity operating any target industrial business in the three provinces.
4. If an income earner has resided in Thailand for over 180 days prior to the start of their contract under this scheme, they will not be eligible for the income tax reduction in the current taxable year. To stay eligible, the income earner must reside in Thailand more than 180 days a year.
5. Companies and juristic entities shall be exempted from corporate income tax for expenses paid for investment, changes, expansion or improvement of property, but not for repairs of a property’s current conditions. The income tax exemption is for 50% of the expenses of the total amount actually paid. Eligible property must be: machinery, parts, equipment, tools, accessories, decorations, and furniture; computer programs; vehicles registered in Thailand; and permanent buildings excluding residential land and buildings. The property shall be located in Thailand, not been granted any tax privileges or juristic person income tax exemptions, and have never been used.
6. Amendment of the definition of machinery that is eligible for income tax exemption on the income paid for investment to help make tax privilege rights clearer for companies and juristic partnerships. The updated definition of machinery includes the assemblage of parts for generating, transforming, or transmitting energy and powered by water, steam, fuel, wind, gas, electricity, or any combination thereof.
Other Tax Exemptions
• A Corporate Income Tax (CIT) exemption not exceeding 13 years (previously 8 years) for projects in the fields of advanced technology and innovation or research and development. Possible 15 years CIT exemption plus grants for strategic projects in EEC.
• An Investment Tax Allowance (ITA) allowing the amount of investment capital in the promoted projects to be computed as an allowance from the annual net profit within 10 years from the date of the first income was made under the promoted projects.
• An Import Tax exemption for imported materials in order to promote research and development.
Additional Investment Incentives
• Foreign land ownership restrictions waived
• Eligible foreign investors will be permitted 50-year leases for residential development and 99-year leases for commercial and industrial areas
• Work permit and visa assistance and a five-year business visa
• No foreign equity restrictions on manufacturing activities and targeted services
• Three-month public-private-partnership (PPP) procedure
• Fast-track environmental impact assessment (EIA)
• Foreign currency account and use of foreign currencies without exchanging into Thai baht
• One Stop Services
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