New rules for the promotion of digital activities by the BOI
The Board of Investment (BOI) of Thailand has announced the merger of its list of promoted digital activities into a single new category for software development, digital service platforms or digital content (5.10) to support the software development platform, digital services, digital content and the development of Thai personnel in information technology.
Promotion Terms and Conditions
According to the BOI announcement, category 5.10 Software, digital platform or digital content development has the following conditions:
1. To be eligible for the investment promotion, projects must involve development activities of any new software, digital platforms or digital content in Thailand
2. Where a project has developed a product before applying for promotion, further development or improvement of the product in Thailand is required and should not be listed in the annex to this explanatory note. In these cases, the applicant must provide comparison information between the product developed before requesting promotion and subsequent developments or improvements after requesting promotion.
The comparison information must contain at least the following details:
- Product Name
- Feature or function of software or digital platform
- Structure of software, digital platform or digital content
- Computer tools and language used in development
3. The minimum investment capital of each project should not be less than 1,500,000 baht per year, calculated on the basis of the salary expenditure of Thai information technology personnel employed additionally after the application for investment promotion .
4. Projects must have software, digital platform or digital content development process in Thailand as stipulated by the Bureau.
5. Projects are allowed to use existing or used machinery.
6. The investment promotion of this business does not include the retail and wholesale of all types of products.
7. Income eligible for corporate tax exemption must be derived from sales or services directly related to the promoted development of software, digital platforms or digital content, as stipulated by the Office.
- The corporation tax exemption ceiling is set according to the actual expenses of the year of application of the incentives as follows:
- The corporation tax exemption cap is 100% of salary expenses of Thai IT personnel employed in addition to Thai IT personnel employed before the date of submission of the investment promotion application.
- The corporation tax exemption cap is 200% of expenditure on training courses related to the development of information technology to develop the skills of Thai personnel and expenditure on human resource development under the cooperation project with educational institutions according to the specified models. These models could include work-integrated learning (WiL), co-operative education, dual vocational education, or co-operation to develop Thailand’s IT workforce, as approved by the Bureau.
- The corporation tax exemption ceiling represents 100% of the expenses for the acquisition of the ISO 29110 or CMMI level 2 standard quality system certificate or other equivalent international standards
9. Projects cannot apply for additional incentives for improving competitiveness and incentives under the investment promotion measure for small and medium-sized enterprises (SMEs).
10. If the projects wish to apply for the incentives in accordance with the Eastern Economic Corridor (EEC) Investment Promotion Measure for Human Resource Development, they should inform of their application when applying for the investment promotion. They are not allowed to modify their application after the approval of the investment promotion.
The rights and benefits of the corporate income exemption
The income applicable to the corporate tax exemption must be derived from the sale and provision of services directly related to the development of software, the digital platform or the digital content in the activities promoted. The prescribed types of income are:
- Revenues derived from the development, installation, testing, improvement and maintenance of the software, the digital platform or the digital content of the projects
- Income from the sale of software, digital platforms or digital content developed as part of the project
- Income from royalties (license fees) for the uses of software developed under the project
- Income from subscription fees for the services of the software or digital platform developed in the projects
- Revenue from additional in-app feature/function sales (In-App Purchase)
- Revenue from advertisements appearing in the software, digital platform or digital content developed in the projects
- In the case of investment projects for the further development of an existing software, digital platform or digital content, the first revenue generation date is the date on which the projects sell or maintain a software, digital platform or digital content that has been further developed. as specified in the projects
However, the income applicable to a request to exercise the rights and advantages of the exemption from corporation tax does not include income received in the form of commissions, expenses and other service charges that are not directly related to the software or the digital platform of the promoted projects. and income from the distribution of data or data analysis reports without software development in the project, or any other income that the Bureau considers irrelevant to the specified criteria. The Bureau will mainly look at the types of income or acquired intentions.
Due to the high volume of applications related to the digital industry, the Board of Investment (BOI) has decided to combine the above categories into a single category, 5.10 (Software, digital platform or digital content development), including adding new conditions to attract investors. In addition, it should be emphasized that the project development process is a key element for the promotion of the BOI in the new category 5.10.