Numerous businessmen who want to start their activities in Thailand choose to open companies in the special economic zones, to benefit from the advantages offered by the country. Special taxes and easy company registration in Thailand’s special free zones are among the important compensations to consider before settling in the country. Our specialists in company formation in Thailand are here to offer suitable information and guidelines when registering a company in the country.
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The advantages of registering a company in Thailand’s free zones
Any foreign entrepreneur who wants to set up a free zone company in Thailand needs to propose an application to cover the BOI (Board of Investments) promotion status. In other words, the investment plan related to Thailand’s free zones will be properly analyzed by the BOI, in order to receive the tax incentives. For instance, if a free zone trading company in Thailand generates more than BHT 1,8 million per year, the VAT can be 0%. The imported products for resale commercial purposes in Thailand are free of taxes. Besides that, the goods can be moved to a free zone in Thailand, in order to avoid the VAT. A free zone company in Thailand will also imply low utility bills and labor expenses, strong reasons for numerous entrepreneurs to relocate their businesses in such areas.
The list below includes part of the advantages that can be found in a special economic zone:
- Corporate income tax exemption: an exemption from the corporate income tax for a number of years.
- Corporate income tax reduction: a further 50 percent deduction from the corporate income tax can be available for a number of years.
- Import duty reduction: this can apply to the import of machinery and other items, as per the chosen zone.
- Import duty exemptions: some materials, such as raw materials that are imported into the zone can benefit from an exemption from import duty.
- Investment cost deduction: this deduction can have a certain percentage and it will apply on the construction and installation costs for the facility.
- Employment permissions: the company can bring foreign experts in Thailand and they can employ foreign unskilled workers according to certain conditions (applicable in some cases).
Businesses that are in certain target sectors will be the ones to fully benefit from these incentives and deductions, however, other companies may also benefit from the generally applicable promotion scheme of the Board of Investments. The target industries are the following:
- Agriculture, fisheries
- Ceramics, jewelry, gems
- Textile and leather
- Medical equipment, pharmaceuticals
- Automotive, machines
- Electronics, plastics
- Logistics
- Tourism
- Industrial estate or zones
Entrepreneurs who open a company in Thailand in one of these targeted business sectors can have important benefits when deciding to incorporate in a SEZ.
Investors should be well aware that each special economic zone will promote two or more of these business sectors and some of the categories are being promoted in all of the existing zones.
First phase SEZ Development includes Tak, Mukdahan, Sa Kaeo, Trat, Songkhla. Second phase SEZ Development includes Chiang Rai, Kanchanaburi, Nong Khai, Nakhon Phanom, Narathiwat. The difference between the second phase and the first phase is their commencement year, with the first phase starting 2015 and the second one in the following year. The areas were prioritized based on an initial feasibility study. Investors who open a company in Thailand can choose the preferred zone according to the target business sector and also according to its location when one target industry is being promoted in more than one zone (applicable to some of the target industries).
These areas are located close to Thailand’s borders, allowing for investment opportunities in the border areas and the development of the trade, investment and economic relations with the country that borders the area close to a certain special economic zone.
Our company formation agents in Thailand can provide you with complete and correct information about the special economic zones in the country and can offer assistance if you are interested in setting up a company in Thailand. It is good to know that all local or foreign entrepreneurs should solicit guidelines about the company registration procedure in Thailand.
The registration process in Thailand’s free zones
Any overseas businessman who wants to set up a company in Thailand’s free zones needs to know that the company registration procedure has low costs and can be ready within a few days, if the proper documents are provided, including important statements related to the export activities or manufacturing. When opening a free zone company in Thailand, the special licenses can be obtained at the same time, suitably provided by the special economic zones authorities. The minimum share capital for registering a free zone company in Thailand is $62,000. The Thai company formation can be entirely explained by our consultants, no matter the type of enterprise you want to establish in Thailand.
The table below compares three of the aforementioned special economic zones.
| Characteristics | Nong Khai | Kachanaburi | Tak |
| Industry | Agriculture, textile | Automobile | Agriculture, light industry |
| Tax exemption | Yes, VAT and corporate tax exemption | VAT and corporate tax exemption | Yes, VAT and corporate tax exemption |
| Type of company | LLC | LLC | LLC |
| Foreign ownership | Yes | Yes | Yes |
| Directors and shareholders | One director and three shareholders | One director and three shareholders | One director and three shareholders |
The requirements for the incorporation of the company and its management are light, given the fact that the company is not subject to two important corporate taxes, the VAT and corporate income tax. However, investors should know that they are required to prepare the annual audited financial statements and open a bank account for the company, with a minimum deposit and with the possibility to choose a multicurrency account.
A company set up in a Thai SEZ is able to do business with Thai clients, to issue invoices to these clients and to engage in import and export activities, including importing raw materials. Moreover, there can be special conditions for the employment of foreign workers as well as unskilled workers in certain promoted projects. Work visas will need to be obtained and it can take approximately one month to obtain these.
Thailand’s Special Economic Zones are areas where foreign investors can engage in a wide array of business activities, at the same time fully benefiting from tax advantages and company formation advantages. Company formation in Thailand is simplified in these areas, and even more so, running the company after incorporation and engaging in international trade activities is facilitated here. Investors who wish to start a business in one of the business areas listed above, that are targeted by the SEZ, can explore the different advantages offered by these areas and decide if they will suit the needs of their business.
You can contact our team of experts in company formation in Thailand for additional information about how to open a free zone company in Thailand.