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Update on the New Investment Promotion Packages (EV Battery Management and/or Energy Storage, Data Hosting, Quarantine Facilities for Animals for Export) and the New Investment Promotion Measure to Enhance the Automotive Part Industry (Thailand)

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July 2024

Update on the New Investment Promotion Packages (EV Battery Management and/or Energy Storage, Data Hosting, Quarantine Facilities for Animals for Export) and the New Investment Promotion Measure to Enhance the Automotive Part Industry (Thailand)

Author: Yothin Intaraprasong, Chattong Sunthorn-opas, Waritpan Titatornwattanasiri (Co-author)

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Publisher: Nagashima Ohno & Tsunematsu

Journal / Book: NO&T Thailand Legal Update No.32(July, 2024)

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Practice Areas

*Please note that this newsletter is for informational purposes only and does not constitute legal advice. In addition, it is based on information as of its date of publication and does not reflect information after such date. In particular, please also note that preliminary reports in this newsletter may differ from current interpretations and practice depending on the nature of the report.

On 14 June 2024, new investment promotion packages for several key business sectors were approved at a meeting of the Thailand Board of Investment (BOI). Additionally, a brand-new investment promotion measure targeting the automotive part industry was approved, aimed at enhancing the production efficiency of the automotive part industry and increasing the competitiveness of domestic manufacturers as well as promoting the industry to develop into a production base for new industries in the future. The details of these measures are described below※1.

I. Newly added BOI Businesses※2

(i) EV battery management and/or energy storage

Businesses related to EV battery management and/or energy storage have been added to the BOI promotional businesses to further develop Thailand’s comprehensive EV battery administration and management system and to support the entire EV ecosystem. Details of the conditions and incentives of each business can be summarized as follows:

Eligible Activity	Material Conditions and Incentives
Category 7.4.1: Service repair centers of used EV batteries	The project must be certified for quality and safety by EV car manufacturers or EV battery manufacturers. The project must have a testing process for the capacity and safety of batteries, in accordance with the BOI’s approval. The project must have the expenses for personnel in engineering and technical fields of not less than THB 1,500,000 per year, which must be for newly hired employees. In addition, an investment capital of not less than THB 1,000,000, excluding the cost of land, working capital and transportation, must be made. Both the expenses for the salary of personnel and investment capital must be in accordance with the requirements stipulated by the BOI. The project must obtain ISO 14000 certification before utilizing the tax incentives. In the case of non-utilization, ISO 14000 certification must be obtained prior to the commencement date of the project operation start-up. Lead-acid batteries are not eligible for promotion. The project will be entitled to a 3-year CIT exemption※3.
Category 7.4.2: Reuse or repacking of disused EV batteries and/or Energy Storage※4	The project must manage disused EV batteries, excluding lead-acid batteries and/or energy storage used in Thailand only. The project must have an installation process of battery management system (BMS) and a testing process of the capacity and safety of batteries. The project must obtain ISO 14000 certification before utilizing the tax incentives. In the case of non-utilization, ISO 14000 certification must be obtained prior to the commencement date of the project operation start-up. The project will be entitled to a 3-year CIT exemption.

Eligible Activity

Material Conditions and Incentives

Category 7.4.1: Service repair centers of used EV batteries

The project must be certified for quality and safety by EV car manufacturers or EV battery manufacturers.
The project must have a testing process for the capacity and safety of batteries, in accordance with the BOI’s approval.
The project must have the expenses for personnel in engineering and technical fields of not less than THB 1,500,000 per year, which must be for newly hired employees. In addition, an investment capital of not less than THB 1,000,000, excluding the cost of land, working capital and transportation, must be made. Both the expenses for the salary of personnel and investment capital must be in accordance with the requirements stipulated by the BOI.
The project must obtain ISO 14000 certification before utilizing the tax incentives. In the case of non-utilization, ISO 14000 certification must be obtained prior to the commencement date of the project operation start-up.
Lead-acid batteries are not eligible for promotion.
The project will be entitled to a 3-year CIT exemption※3.

Category 7.4.2: Reuse or repacking of disused EV batteries and/or Energy Storage※4

The project must manage disused EV batteries, excluding lead-acid batteries and/or energy storage used in Thailand only.
The project must have an installation process of battery management system (BMS) and a testing process of the capacity and safety of batteries.
The project must obtain ISO 14000 certification before utilizing the tax incentives. In the case of non-utilization, ISO 14000 certification must be obtained prior to the commencement date of the project operation start-up.
The project will be entitled to a 3-year CIT exemption.

(ii) Data hosting

To support the rising demand for data hosting and the development of the digital industry in Thailand, the BOI has added a data hosting business as a new BOI promotion category. The material conditions and incentives are as follows:

Eligible Activity	Material Conditions and Incentives
Category 8.2.4: Data hosting※5	The project must have a leasing server service for data hosting. The project must be located in at least two data centers in Thailand that have obtained ISO/IEC 27001 certification. The project must have an investment capital of not less than THB 5,000,000,000, excluding the cost of land and working capital. The project will be entitled to an 8-year CIT exemption.

(iii) Quarantine facilities for animals for export

To prepare for the growth of Thailand’s international livestock market, the BOI has also added a promotion category for quarantine facilities for animals for export. To be eligible for the BOI promotional business under this category, the quarantine facilities must be certified pursuant to the standards of the Department of Livestock Development or relevant authorities. The project will be entitled to a 3-year CIT exemption.

II. Investment Promotion Measure to Enhance the Automotive Part Manufacturer Industry※6

As the BOI’s aim is to stimulate and encourage automotive part manufacturers to enhance their ability to compete in terms of production and to prepare to transition to a new industry, the BOI approved this Investment Promotion Measure to Enhance the Automotive Part Manufacturer Industry. In this regard, to be eligible for this BOI measure, applicants must be engaged in activities that fall under one of the following BOI promoted business categories:

Category 3.4: Manufacture of engines, equipment or parts; and
Category 3.5: Manufacture of automotive parts.

In addition, existing projects that have already received BOI promotion as well as new projects may apply for this BOI measure. The details of the material conditions and incentives are as follows:

Material Conditions

The investment value of the project must be not less than THB 1,000,000, excluding the cost of land and working capital.
The investment value or expenses includes the cost of the machinery and equipment, the application of the standards used in the new industry, the advisory fees for enhancing production or changing to the new industry, the fees for training personnel in technical fields or any programs related to industry enhancement, the software programs or information systems used and the lease/use of cloud or data center services.
The applicant must propose a plan for investment to enhance the automotive part industry and/or transition to the new industry based on the criteria prescribed by the BOI, such as changing machinery to enhance production efficiency, applying the standards used in the new industry, training personnel in technical fields or any programs related to industry enhancement, etc.
The applicant must submit the application by the last business day of 2025.

Tax Incentives

The project will be entitled to an exemption on import duties for machinery.
The project will be entitled to a 3-year corporate income tax exemption for 50% of the investment capital for enhancing the relevant industry, excluding the cost of land and working capital. If such project uses machinery that is related to or supports the domestic automated machinery manufacturing industry and such machinery is not less than 30% of the value of the machinery that is changed, the project will be entitled to a 3-year corporate income tax exemption for the proportion of 100% of the investment capital for automation and robotics, excluding the cost of land and working capital.
The exemption period will start from the date revenue is derived after the BOI certificate is issued, and the project must be completed within 3 years from the date on which the BOI certificate is obtained.

Should you require further details in respect of any measures or wish to receive further updates, please feel free to contact us.

Endnotes

*1
BOI Press Release No. 67/2567 (Aor. 26) dated 14 June 2024

*2
BOI Announcement No. Sor. 5/2567 Re: Amending the List of the BOI Promotion Activities according to BOI Announcement No. 9/2565 dated 28 June 2024

*3
CIT means Corporate Income Tax.

*4
Ibid, Supra Note 2.

*5
Ibid, Supra Note 2.

*6
BOI Announcement No. 11/2567 Re: Investment Promotion Measure to Enhance the Automotive Part Manufacturer Industry dated 28 June 2024

July 31, 2024

This newsletter is given as general information for reference purposes only and therefore does not constitute our firm’s legal advice. Any opinion stated in this newsletter is a personal view of the author(s) and not our firm’s official view. For any specific matter or legal issue, please do not rely on this newsletter but make sure to consult a legal adviser. We would be delighted to answer your questions, if any.

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Lawyers

Yothin Intaraprasong

Partner

Bangkok

Chattong Sunthorn-opas

Associate

Bangkok

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