Thailand: New categories relating to high precision machinery eligible for corporate income tax exemption

Corporate income tax exemptions for five or eight years may be granted

New categories relating to high precision machinery eligible

Article Posted date 17 January 2023

The Board of Investment announced new categories relating to high precision machinery for which corporate income tax exemptions for five or eight years may be granted.

The categories of machinery that are currently eligible for corporate income tax exemption are limited to those such as automation, and the exemption is granted only for three or five years. In addition, currently only the manufacturer of the machinery itself qualifies for the exemption, but under the new rules companies in related industries (such as those that repair related equipment and parts) may qualify for the exemption.

Information about the various activities, conditions and incentives relating to the potential exemption for high precision machinery is summarized in the chart below:
 

Activities

Key conditions

Key incentives

4.5.5 Manufacture of high-precision machinery including equipment and parts of machinery and repair of machinery

4.5.5.1 Manufacture of high-precision machinery
  1. The project must have part forming and and/or assembly processes as approved by the Board
  2. The project must have one of the following features:
    1. The products must be machinery used in the production process of electronics product employing Microfabrication Technology such as the manufacturing of integrated circuit (IC), Semiconductor,  Microelectromechanical Systems (MEMS).
    2. The machinery manufactured by the project must be capable of determining a tolerance value of IT5 or less in producing workpieces according to International Tolerance Grades (IT).

Basic incentive (A2)

Tax incentive:

  • Corporate income tax (CIT) exemption on the profits derived from the promoted business for eight years

Non-tax incentive:

  • Permit to bring skilled workers and experts to work in the promoted business into Thailand

4.5.5.2 Manufacture of equipment and parts of high-precision machinery
  1. The project must have part forming and and/or assembly processes as approved by the Board
  2. The project must have one of the following features:
    1. It must be parts or equipment used for the main function of the high-precision machinery under the category 4.5.5.1.
    2. The main machinery used in the project must be capable of producing workpieces with a tolerance value of IT5 or less according to International Tolerance Grades (IT)

Basic incentive (A2)

Tax incentive:

  • CIT exemption on the profits derived from the promoted business for eight years

Non-tax incentive:

  • Permit to bring skilled workers and experts to work in the promoted business into Thailand

4.5.5.3 Repair of high-precision machinery
  1. The project must involve the repair of key parts used for the main function of high-precision machinery.
  2. The project must have expenses on salaries for machinery repair personnel of at least 1,500,000 Baht per year which must be new employment or must have investment (excluding cost of land and working capital) of at least 1,000,00 Baht.

Basic incentive (A3)

Tax incentive:

  • CIT exemption on the profits derived from the promoted business for five years (CIT exemption with no cap)

Non-tax incentive:

  • Permit to bring skilled workers and experts to work in the promoted business into Thailand

 

Read a January 2023 report prepared by the KPMG member firm in Thailand

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