The Board of Investment (BOI) is promoting some business activities in order to earnestly awake Thai economy. The BOI promoted activities are categorized in seven main sections. If you look into the list of activities eligible for BOI promotion, “Software” is one of the most popular activities which is sub-categorized under Section 5: Electronic Industry and Electrical Appliance. It is also divided in three types as follows: (5.8.1) Enterprise Software, (5.8.2) Digital Content and (5.8.3) Embedded Software. In this article we will review about “Games” under Digital Content for Software Activity as follows:

• What is the definition of “Games” which is eligible for BOI promotion?
• What are the conditions and privileges provided by the Board of Investment under this promotion?

According to the Announcement of the Office of the Board of Investment No. Por. 5/2547, it defines  the meaning of “Games” under Digital Content for Software Activity as an entertainment software that operates on various devices, consisting of graphics and programming, with rules, conditions of the game that players can follow, such as Windows-based, mobile platform, console, PDA, online game, Massive Multi-player Online Game (MMOG), etc.  In additional, investors who solely perform as online game service providers seem not to be qualified for the aforesaid promotion if they do not have any processes in relation to the software development.

The general conditions attached to the aforesaid promotion as of software activity are as follows:

1. The minimum investment capital must be at least one million baht excluding cost of land and working capital of the company.
2. The ratio of debt to equity should not exceed three to one for a newly established project.
3. Project must include software development processes specified by the Software Industry Promotion Agency (SIPA).
4. If the project has investment capital of 10 million baht or more, the project must obtain a quality standard certificate from Software Industry Promotion Agency or receive a Capability Maturity Model Integration quality standard certificate or any equivalent standard within 2 years from the start-up date.
5. Revenues derived from sales or the provision of services that are directly related to a promoted software business shall be regarded as revenue of such promoted business.

Once the company is promoted, the applicant who applies for the Software activity promotion will be granted privileges as an activity of Special Important and Benefits to the Country as follows:

• Exemption of import duties on machinery for all zones.
• Eight-year corporate income tax exemption for all zones which is not subject to the corporate income tax exemption cap.
• Other relevant location-based incentives.

According to the serious flood situation in many areas, Thai government has realized that this situation is no longer a local economic problem. The Thai flood which leads to the major damage to factories and business operations, has affected both foreign and domestic investors. The Board of Investment is also worried about the BOI promoted companies and tries to resolve the thread of flooding by launching Flood Relief Measures.

According to BOI announcement dated on the 7th October, 2011, BOI promoted companies are allowed to apply for the urgent permission to bring in foreign skilled workers and experts on a temporary basis (not more than 30 days) without Non-Immigrant B Visa. The applicant can submit the following documents at the Board of Investment Expert Unit.

1. Application [Form Shor Kor 3 (F FR NNI 20) 3 copies per person]
2. Application [Form Tor Tor 10]
3. 1 Photo
4. 1 copy of passport

However, the applicant who apply to enter the Kingdom of Thailand under BOI Flood Relief Measures must engage in necessary and urgent work which is exceedingly necessary and urgent as if there will be the serious problem, if it could not be done immediately. On the other hand, it is not deemed as a necessary and urgent work if the applicant will exercise in administrative and academic works which consume uncertain of time. The applicant who applies for the long-term performances and general duties will not be permitted under this BOI Flood Relief Measures.

The BOI also allows promoted companies to change the place to apply for Visa Extension, Work Permit Issuance and Work Permit Extension from preferred Provincial Immigration Office and Provincial Employment Office to One Stop Service Center for Visas and Work Permits.

Moreover, the promoted companies are allowed to report the existence of foreign nationals which is required to inform every 90 days via telephone, fax, sms, or email.

The information to be provided is expert’s name, company name and contact phone or mobile phone.

In addition, the BOI provides the list of space available for temporary warehouses and factories which investors or manufacturers might be interested. Companies whose factories are already affected or might be affected by flooding may contact the BOI office for help of moving machinery and raw materials or other kind of help every day, including weekends.

According to Thai laws, foreign investors who wish to establish a business in Thailand are restricted to the percentage of foreign shareholding allowed in a Thai company.  Thai company is required Thai nationals to hold majority of the shares. Otherwise, the company is considered as a foreign own company and required to obtain for Foreign Business License before the company is able to commence in any business activities in Thailand.

In case the company is approved the BOI promotion, BOI privileges override the mentioned restriction and allow foreign investors to acquire a higher percentage of shares in the BOI promoted business activities. However, projects in agriculture, animal husbandry, fisheries, mineral exploration and mining must be operated by a Thai company in which Thai nationals hold shares totaling not less than 51 percent of the registered capital.
Under the BOI promoted activities, activities where the business cannot be fully owned by foreign investor are as follows:
Section 1: Agriculture and Agricultural Products

• Plant propagation and development

Section 2: Mining, Ceramics and Basis Metals

• Mineral ore prospecting
• Mining or ore dressing
• Marble or granite mining

Section 4: Metal Products, Machinery and Transportation Equipment

• Manufacture of 4-stroke motorcycles

Section 7: Service and Public Utilities

• International Trading Companies

Bear in mind that the Board of BOI still reserve their right to set the amount of shares eligible to be held by foreign investors on any promoted projects where deemed appropriate.

• By Thai Company Limited with Thai majority own
• By foreign majority own with Foreign Business License (FBL)
• By foreign majority own with an exception of FBL i.e. BOI, U.S.-Thai Amity-Treaty

Q: What is the corporate tax structure for a company in Thailand?
A: A Thai company limited is subjected to Thailand Tax on its worldwide net profit at the end of each year. The tax rate will range between 15-30% depending on the types of taxpayers. However, if the company is promoted by BOI, the company might be exempted or reduced from the corporate income tax with the maximum of 8 years exemption.