17 Sept 2019
THAILAND: Raft of FDI Incentives Launched to Woo Casualties of US-China Trade War
In a bid to appeal to overseas companies caught in the crossfire of the ongoing China-US trade war, the country has unveiled an investment incentive package aimed at those businesses looking to relocate their production facilities from China to Thailand. The package – Thailand Plus – includes corporate income tax (CIT) cuts, the establishment of country-specific special investment zones as well as proposals to liberalise the country’s Foreign Business Act (FBA) in order to attract a higher level of foreign direct investment (FDI).
In terms of the tax incentives on offer, businesses that submit applications by the end of 2020 and commit to a real investment of at least Thai Baht 1 billion (US$32.63 million) by 2021 will be offered a 50% reduction on the country’s 20% CIT rate for five years. This benefit will be available to all new and existing businesses regardless of where they are located in the country and will be offered on top of any benefits currently enjoyed under the terms of any of the country’s existing investment promotion schemes.
In addition, until the end of 2020, companies will be entitled to claim a 250% (up from 200% at present) tax exemption on expenses incurred in upskilling personnel in the use of advanced technology. Over the same period, overseas businesses that hire local employees, who possess skills in any of the STEM (science, technology, engineering and mathematics) fields, will be permitted to claim tax exemptions of up to 150% of the salaries paid to such staff. Furthermore, companies that invest in automation systems will be allowed an additional 50% tax deduction over and above the 150% tax deduction currently available for any such costs incurred.
In terms of territory-specific industrial zones, plans are in place to provide dedicated individual facilities for China, Japan, Taiwan and Korea-backed projects.