You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

March 6, 2019

BOI Merges Two Promoted Activities into New International Business Centers

Subscribe to Updates
Informed Counsel

On December 11, 2018, the Board of Investment (BOI) issued two new announcements: one canceling the International Headquarters (IHQ) and International Trade Centers (ITC) categories of activities for investment promotion, and one introducing a new category called International Business Centers (IBCs). The IHQ and ITC categories had existed in some form for almost a decade (previously existing in slightly different forms as Regional Operating Headquarters and International Procurement Offices, until they were canceled and replaced by the IHQ and ITC categories for applications submitted in 2015 onward).   

This change is intended to make investment in Thailand more attractive to the global community by implementing new international tax standards under the OECD’s Inclusive Framework on Base Erosion and Profit Shifting, which Thailand acceded to in June 2017. The framework encourages countries to adjust their tax measures to eradicate inadvertent “gaps and mismatches” in the tax regimes of different jurisdictions, effectively harmonizing tax rules between member jurisdictions. This is intended to prevent exploitation of these “gaps and mismatches,” which have long been used by savvy international tax structures that move capital from one jurisdiction to another, benefiting from favorable tax regimes along the way.    

Although the new IBC category is, in principle, merely a combination of the old IHQ and ITC schemes, in practice there are some key new changes that investors—especially those familiar with the old IHQ and ITC schemes—should be aware of.

Eligible Activities for an IBC

Registered Capital   

As with the IHQ and ITC, the paid-up registered capital of an IBC must be at least THB 10 million.

Employment   

Unlike the IHQ and ITC, an IBC is required to have at least 10 skilled employees. A limited exception is available to IBCs that only provide treasury center services to affiliated enterprises, for which the requirement is reduced to five. This is a new requirement and was not included under the IHQ or ITC categories.

IBC Privileges – Board of Investment   

The BOI privileges available to IBCs are generally the same as those under the IHQ and ITC schemes, and are mostly non-tax incentive privileges, such as the right to operate a business with a foreign majority structure, favorable work permit terms for foreign expatriates, the right to own land, etc.

Companies that apply for IBC privileges also enjoy an import duty exemption for machines imported for use in research and development or for training purposes. How- ever, a privilege for import duty on raw or essential materials used in manufacturing of exported products would not be available for IBCs, nor would merit-based privileges.

IBC Privileges – Revenue Department   

It is also possible for IBCs to benefit from tax incentives, although to do so they must notify the Revenue Department separately from their application with the BOI. To qualify as an IBC at the Revenue Department, in addition to meeting the requirements of the BOI, the applicant must spend at least THB 60 million, in each accounting period, to recipients in Thailand, and have paid-up capital of THB 10 million at the end of each accounting period. The applicant must also comply with any other criteria, methods, and conditions stipulated by the Director-General of the Revenue Department in the future.

If an IBC meets these requirements, it will be entitled to the following tax privileges:

  • Reduced corporate income tax rate of 8%, 5%, or 3%, based on expenditures in Thailand of at least THB 60 million, THB 300 million, and THB 600 million, respectively;
  • Exemption from corporate income tax on dividends received from an affiliate;
  • Exemption from specific business tax for income received from treasury center functions;
  • Reduced personal income tax rate of 15% for expatriates working for an IBC; and
  • Exemption from withholding tax for offshore affiliates receiving dividends or interest paid from an IBC.

Impact on Existing IHQs and ITCs   

Companies currently promoted under the BOI’s IHQ and ITC schemes will not be affected, and they will continue to enjoy the incentives under the BOI investment certificate granted to them. Those who registered with the Revenue Department as Regional Operating Headquarters (ROH1 and ROH2), IHQs, or ITCs may opt to convert to IBCs if they are qualified and meet the conditions, or continue to enjoy the tax incentives laid out by the precedent notification or announcement until the end of the relevant timeframe.   

Overall, the new IBC may be less attractive than the precedent ROH, IHQ, and ITC frameworks as a result of the minimum expenditure requirements and other conditions. However, a foreign business license may still be a favorable option for companies that fail to meet the new requirements, and the benefit of harmonization between the Thai investment framework and the international community is likely to promote Thailand as a destination for international offices and domestic affiliates of international corporations. While the new framework may be inconvenient for some, the overall effect on Thailand as an FDI location will likely be beneficial.

Download Full Article
Related Professionals

Practices

Corporate/M&A

Location

RELATED INSIGHTS​ 

September 10, 2025
Under Thai law, authorized directors stand as a company’s mind and will and, as such, may incur personal criminal liability for acts or omissions committed in the course of company business. When allegations surface, directors must be prepared for the practical reality that, before guilt or innocence is ever adjudicated, they could be deprived of liberty unless bail release is promptly achieved through the competent legal authority. When Bail Can Be Granted Two procedural moments trigger the need to consider bail. The first arises during the investigative phase, when a claim is lodged against a director with the competent law enforcement authorities. Upon receipt of a complaint, the assigned inquiry officer summons the director for questioning, compiles evidence, and ultimately forwards a prosecution or nonprosecution recommendation to the public prosecutor. Although the public prosecutor retains ultimate discretion to indict an accused director, the police or prosecutor may conclude that pretrial detention is necessary and may therefore apply to the court for an order to hold the director in court custody. The second moment occurs after a criminal case is filed directly with the court. This occurs once a court accepts a criminal case filed by a prosecutor against a director or, alternatively, when the court accepts a case filed by an individual for trial. For cases filed by individuals, the plaintiff presents prima facie evidence at the preliminary hearing, and the court will accept the complaint if it finds sufficient grounds, thereby conferring upon the director the status of a criminal defendant. Upon acceptance of the criminal case, the court then has the inherent authority to order custody pending trial unless the defendant secures bail release. Procedural Considerations Experienced litigants typically prepare bail security in advance and submit a bail petition at the earliest possible time. While there are
Read More
September 8, 2025
On September 1, 2025, Myanmar’s Directorate of Investment and Company Administration (DICA) issued Directive No. 106/2025 to remind all companies and organizations registered under the Myanmar Companies Law of their obligation to strictly comply with the DICA registrar’s orders, directives, and procedures. This directive highlights the importance of legal and procedural compliance in corporate filings, governance changes, and operational conduct. It also signals increased scrutiny over documentation submitted during annual returns, share transfers, and director appointments or resignations. Public companies will be subject to closer regulatory attention, and new company registrations will involve vetting of proposed directors to ensure prior compliance with applicable laws. Compliance The directive emphasizes the following points: Companies must ensure full compliance with the Myanmar Companies Law and all directives issued by the registrar. This includes the proper submission of annual returns and adherence to updated requirements for share transfers and changes in directors. Companies and organizations must comply with all applicable laws, rules, directives, and procedures issued by relevant ministries and departments. If any authority takes action due to noncompliance, the registrar may also take appropriate measures. Noncompliance may result in regulatory sanctions, including restrictions on future company participation and vetting under anti–money laundering and counter–terrorism financing protocols. Prospective directors of newly registered companies will be vetted to confirm no prior violations of applicable laws. Entities must respond promptly and accurately to document requests from the registrar, both during initial registration and in subsequent filings. Companies are strongly advised to review their internal compliance frameworks and ensure readiness to meet DICA’s documentation and procedural expectations. In particular, companies must respond promptly and accurately to document requests from the registrar, whether during initial registration or in subsequent filings. For more information on this DICA announcement, or on any aspect of corporate registration, or assistance with
Read More
September 2, 2025
Thailand’s Office of the Consumer Protection Board (OCPB) has initiated a sweeping regulatory review of licensed direct sale and direct marketing businesses in Thailand and is in the process of notifying business operators to submit their annual business report and financial statement to the OCPB as part of their postlicensing obligations. This move marks a significant escalation in the government’s efforts to enforce compliance and transparency in the sector, which has faced growing scrutiny in recent years. Key Regulatory Considerations All businesses holding a direct sales or direct marketing license are required to submit their audited financial statement along with their business operation report to the OCPB within 60 days from the end of their fiscal year (extendable for up to 30 days by request, if necessary). The OCPB is currently conducting license audits as part of its enforcement duties. The office aims to complete audits for at least 90% of the 2,983 registered businesses that have obtained their license since 2022. This includes a review of the business conduct of the license holder. New license applications are also under scrutiny. Applicants are currently being subjected to background checks, and the OCPB has signaled a more rigorous vetting process moving forward. Impact of Noncompliance Failure to comply with these reporting obligations may result in escalating enforcement actions, including: Official notice to rectify noncompliance within a specified timeframe. Revocation of business registration, if the operator fails to respond. Revocation of business registration could result in a five-year prohibition on reapplying for a direct sales or direct marketing license following the revocation. The OCPB has already initiated outreach efforts, including SMS and email notifications, and has hosted seminars to raise awareness of these obligations. These measures are part of a broader initiative to enhance transparency and consumer trust in the sector. Businesses operating in the direct selling and
Read More
August 29, 2025
On August 15, 2025, Laos’ Immigration Police Department introduced a pilot online arrival registration system for foreign passport holders entering the country. Under the new system, visitors to Laos will be able to register their arrival online up to three days in advance and will be exempt from filling out paper forms at the border. Starting September 1, 2025, online registrations will be accepted at four major international border checkpoints: Wattay International Airport in Vientiane, Luang Prabang International Airport, Pakse International Airport in Champasak Province, and the First Lao-Thai Friendship Bridge linking Vientiane and Nong Khai Province in Thailand. Foreign passport holders arriving in Laos from this date onward will be able to complete the online registration via the official website of the Department of Immigration: http://www.immigration.gov.la/. Upon successful registration, travelers will receive a QR code valid for three days, which must be presented to border authorities upon arrival to verify the registration. During the pilot phase, which is expected to run until early 2026, travelers who have not registered online will still have the option to complete a paper form at the checkpoint. After the pilot phase, the online registration system will become mandatory nationwide, and paper forms will no longer be accepted. This initiative marks a significant step toward modernizing Laos’ immigration procedures. Transitioning from traditional paper-based entry forms to a streamlined digital system will greatly enhance efficiency at border checkpoints. The submission of traveler information ahead of arrival is expected to drastically reduce processing times and alleviate congestion at arrival counters, especially during peak travel periods.
Read More