There are two categories of Free Trade Zones in Thailand:
- General Industrial Zones, and
- Special Economic Zones (SEZs).
Generally, a Special Economic Zone (SEZ) focuses on both manufacturing and exporting. Therefore, by reducing industrial restrictions in Thailand, a Thai Free Trade Zone fosters company operations that benefit the country. There are currently 10 Special Economic Zones (SEZs) in Thailand.
So, before we know more about the 10 SEZs, let us understand the benefits foreign investors can get if they start their business in these zones.
Incentives for Businesses in SEZs of Thailand
Board of Investment Incentives for SEZs
Incentives that are given for BOI general activities located in the Free Trade Zones in Thailand (SEZs) listed on the Announcement on the Board of Investment No. 2/2557 are:
- Exemption on import duties on machinery.
- Three-year additional Corporate Income Tax (CIT) exemption.
- Projects with activities in Group A1* and Group A2** with an eight-year CIT exemption shall receive an additional incentive of a 50% reduction of CIT for five years.
- Double deduction of the costs for transportation, electricity, and water supply for 10 years.
- 25% deduction of the costs of installation or construction of facilities in addition to the deduction of normal depreciation.
- Exemption of import duties on raw and essential materials used in manufacturing for export for five years.
- Non-tax incentives, such as permission to own land and employ foreign unskilled and skilled labor.
* Group A1 – knowledge-based activities focusing on R&D and design to enhance the country’s competitiveness.
** Group A2 – infrastructure activities for the country’s development using advanced technology to create value-added investments in Thailand.
Additionally, incentives are also given to 13 targeted industries in the SEZ like-
- Agro-industry, fisheries, and related businesses
- Ceramic products manufacturing
- Textile, clothing, and leather manufacturing
- Furniture manufacturing
- Gems and jewelry manufacturing
- Medical devices manufacturing
- Automotive, machinery, and parts manufacturing
- Electronics and electrical appliances manufacturing
- Plastics manufacturing
- Pharmaceutical’s manufacturing
- Logistic businesses
- Industrial zones or industrial estates
- Businesses that support tourism
Revenue Department Incentives for SEZs
Non-BOI activities are eligible for incentives from the Revenue Department. Specifically, the incentive includes a CIT reduction to 10% of the company’s net profits for 10 years.
To qualify for the tax incentive, companies must meet the following requirements:
- Companies registered as a corporate entity after 23 June 2020 must be established in a permanent building located in an SEZ.
- Companies registered before 23 June 2020 must be established in an extension or addition to an existing permanent building located in an SEZ.
- Registered as a company or juristic partnership with the Revenue Department before 30 December 2020.
- Must not claim tax incentives under the following:
- CIT exemptions and reductions under the law on investment promotion.
- CIT reductions for Regional Operating Headquarters granted under Article 6 of the Royal Decree No.530 and amendments.
- Income tax exemptions for SMEs under Article 7 of the Royal Decree No.530 and amendments.
- Income tax reductions for investors in SEZs under Article 4 of the Royal Decree No.591.
- Must have separate accounts for business activities in the SEZ for projects receiving incentives and projects not receiving incentives.
Tak Province
- This Free Trade Zone in Thailand (SEZ) has 14 sub-districts with a strategic location on the East-West Economic Corridor (EWEC).
- The Western region of Tak facilitates the transport of goods and resources from the Free Zone to Yangon, the economic center of Myanmar.
- The Mae Sot Airport is an international airport located in the Tak Province that is connected to two domestic locations.
Sa Kaeo Province
- The Sa Kaeo SEZ is in the GMS Southern Economic Corridor. Therefore, it is an important avenue for Thailand to transport products to Phanom Penh and Southern Vietnam.
- The SEZ benefits from co-production with the Poipet-O’neang Special economic development zone in Cambodia.
Trat Province
- Trat province SEZ is an attractive Free Zone for businesses seeking to set up in the tourism and service industries.
- It has 1 commercial airport and has road connectivity with the Laem Chabang seaport and Sihanoukville seaport in Cambodia.
Mukdahan Province
- Mukdahan SEZ is in the East-West Economic Corridor (EWEC). Therefore, it links Thailand to nearby Asian countries such as Japan, South Korea, and Taiwan.
- The SEZ is an important avenue for the transportation of goods and raw materials to Vietnam and Southern China.
Songkhla Province
- Songkhla SEZ is in the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT). Additionally, this SEZ is nearby the Penang Sea Port, Klang Seaport of Malaysia, and a railway linking Thailand with Malaysia.
- This province has a joint Special Economic Development Zone with Sadao and Bukit Kay Hitam in Malaysia. Therefore, this provides a wider range of opportunities for investment in the manufacturing and service sectors and investments from Malaysia.
Chiang Rai Province
- The Chiang Rai SEZ has both land and sea connectivity with the Yunnan Province in Southern China. Thereby, this allows for more efficient trade between the two countries.
- Due to the high quality of its logistic services and its popularity as a tourist destination, the Chiang Rai Province is a popular place for business owners seeking to incorporate in Thailand.
Nong Khai Province
- Nong Thai SEZ is a channel for cross-border trade between Thailand and Laos.
- This SEZ has a well-integrated transport network. Additionally, it includes facilities to aid travel by road, rail, and air.
Nakhon Phanom Province
- Ths SEZ is a commercial route through Vietnam and South China (Guangxi). Therefore, it facilitates efficient and effective deliverance of products to Japan, Korea, Hong Kong, and Taiwan.
- It is popular for producing good quality agricultural products such as rice, sugar cane, and cassava.
Kanchanaburi Province
- Kanchanaburi SEZ is connected with the SEZ of Myanmar and the eastern seaboard of Thailand.
- This SEZ has the potential to facilitate transport between Thailand and Tawai in Myanmar through sea routes.
Narathiwat Province
- Narathiwat province is connected to Malaysia through Asian Highway No. 18. Additionally, it connects to Singapore.
- It is the commercial port for transporting fishing products, wood products, consumer goods, largely exporting boats, and other consumer products.
Therefore, contact us to find out more about how to register a company in Free Trade Zones in Thailand. Additionally, our services include opening a corporate bank account and more. Henceforth, our team of experts will revert within the next 24 hours. Email us at [email protected].
Moreover, investing in the SEZ will offer your businesses a variety of tax and non-tax benefits. Additionally, it will attract international investment in various parts of Thailand. So, do not delay. For further information, please schedule a consultation with Konrad Legal.
