Definition and scope of application of the International Business Center.

The IBC is intended for integrated companies in Thailand that provide services for their associated companies abroad. The Board of Investment has listed 12 services that fall within the scope of the International Business Center IBC regime:

➤ Administrative services, business planning services
➤ Procurement of raw materials and their components
➤ Research and development
➤ Technical support
➤ Marketing and sales promotion
➤ Personnel management and training
➤ Financial consulting services
➤ Economic and investment analysis and research
➤ Credit management and control
➤ Treasury center
➤ International sales
➤ Any other service offered by the Revenue Department (public agency that collects various taxes)

Conditions for benefiting from the International Business Center regime.

Indeed, it is not enough that the activity is part of the list to qualify for the International Business Center. It is then necessary to meet certain conditions set up by the BOI:

➤ A registered capital of at least 10 million Bahts, or about 300,731 USD
➤ The amount of your investment must be at least 1 million Baht or about 30077 USD
➤ The structure must employ at least 10 people, with significant skills or expertise for the activities designated by the IBC OR 5 employees in case it is exclusively the service that relates to financial advice, finally, in case the activity is the international sale, it must relate to the activities listed between 1 and 10 of the list above

The International Business Center regime: tax and non-tax benefits

According to the Royal Decree, the companies eligible for the International Business Center (IBC) will be able to benefit from the following tax advantages listed below and this for a standard period of 15 years:

1. A reduction of the corporate tax rate, depending on the profits obtained:

➤ The rate will be 3% if the company incurs at least 600 million Baht (18,086,202 USD) in local expenses per year
➤ The rate will be 5% if the company incurs at least 300 million Baht (9,043,101 USD) in local expenses per year
➤ The rate will be 8% if the company incurs at least 60 million Baht (1,808,620 USD) in local expenses per year local expenses per year

2. Tax exemption on both local and foreign dividends from subsidiaries,

3. A deferred tax exemption on dividends paid to foreign shareholders and on interest paid to foreign beneficiaries in connection with loans for treasury activities

4. An exemption from certain business taxes on qualifying treasury income,

5. A 15% rate on fixed personal income for eligible expatriate employees; to be eligible several criteria must be met:

➤ Be a permanent employee of a company that meets the IBC criteria and work for that IBC department OR for the international sales sector
➤ In case this employee also works for another department of the company as well as IBC and / or international sales, the income received by the company generated by the IBC status and / or international sales, must not be less than a rate of 70% of the total income
➤ Be registered with the Revenue Department
➤ Reside in Thailand for a minimum of 180 days in the fiscal year for which he/she wishes to register for tax benefits, except for the first and last fiscal years where such foreign employees may reside for less than 180 days in those given fiscal years
➤ Have obtained a work permit since the first day of work, under the IBC status as an expert or competent person from the Department of Labor, Ministry of Labor or under the BOI on Employment Promotion Law or any other law
➤ Be a taxpayer with assessable income under the Tax Code of a minimum of 200,000 Baht per month on average (calculated based on the number of months spent in Thailand) since the IBC status
International business center thailand

ℹ️  Therefore, in case the company’s activity does not qualify as IBC for a given fiscal year, the employee will not be able to obtain these tax benefits for the fiscal year in question as he/she does not meet the criteria.

Procedural point: In order to qualify for these benefits, the BOI company must submit its IBC application to the Revenue Department.

Possible Revocation: In any given year, if any of the conditions are not met, the benefits will cease for that year. If the conditions are not met for several successive years, the IBC status will be revoked and revoked and the benefits granted in previous years may be withdrawn.

The BOI also proposes non-tax benefits. These are part of the B1 classification proposed by the BOI and include the following benefits:

➤ Full ownership of shares held by foreign citizens
➤ Exemption from import duties on machinery (only for sectors dedicated to research and development and training)
➤ Permission to own the land on which the structure is located
➤ Repatriation of foreign currency
➤ Permission to bring in foreign employees as expatriates

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