ECommerce companies are not exempt from corporate income tax and import duty on machinery. ECommerce companies are also not eligible for merit-based incentives.
BOI promotion, “Software” is one of the most popular activities that is classified in Section 5: Electronic Industry and Electrical Devices. Software” means a computer program, application, system or set of instructions written in computer languages to instruct a computer or electronic device to operate as specified.
Thailand’s software industry has always been robust due to the country’s excellent infrastructure, which is able to provide quality services that are essential to software production. This infrastructure includes broadband internet, network security, low power outage rates, and robust production facilities.
The activities included in software development companies are divided into three activities:
|➤ Embedded software activities|
|➤ Enterprise software and digital content activities|
|➤ High value-added software activities|
Enterprise software and digital content activities:
Embedded and high value software business:
The general conditions for the issuance of a BOI license for a software development company are as follows:
|➤ The minimum investment capital must be at least one million baht excluding the cost of land and working capital of the company|
|➤ The debt to equity ratio shall not exceed three to one for a newly established project|
|➤ The project must include the software development processes specified by the Software Industry Promotion Agency (SIPA)|
|➤ If the project has an investment capital of 10 million baht or more, the project must obtain a quality standard certificate from the Software Industry Promotion Agency or receive a Capability Maturity Model Integration quality standard certificate or other equivalent standard within 2 years from the start-up date|
|➤ Benefit from a corporate tax exemption for 5 years, with a cap of 100% of investment capital, excluding the cost of land and working capital|
|➤ Benefit from an exemption from import duties on machinery|
|➤ Benefit from non-fiscal incentives|
|➤ May benefit from merit-based incentives|
In order to qualify for these incentives, the project must meet several conditions:
|➤ The project must hire digital specialists and have a capital investment (excluding the cost of land and working capital) of at least 1 million baht|
|➤ The project must include digital service processes as approved by the Council|
|➤ Projects with investment of 10 million baht or more (excluding the cost of land and working capital) shall be certified ISO 20000 or other quality standard certificate approved by the Ministry of Information and Communication Technology within 2 years from the date of commencement of full operation|
|➤ The corporate tax exemption shall be reduced by one year|
|➤ Income from sales or provision of services that are directly related to a promoted digital service business shall be considered income of such promoted businesses|
The BOI promotion for the digital industry is a beneficial scheme where the applicant can retain 100% ownership of the company and benefit from the incentives mentioned above. However, the applicant must pay attention to the many criteria and conditions. The Thai government has recently amended this scheme to simplify the application of the digital industry investment scheme.
To attract highly skilled labor and investors the Thai government has approved a new visa category called SMART visa, which came into effect since February 1, 2018. This type of visa encourages high-skilled foreigners to come and work or invest in Thailand. The digital industry is one of the 10 industrial activities targeted by this type of visa.
The 4 categories of foreigners eligible to apply for the SMART visa are: Investors, Startup entrepreneurs, Highly skilled experts (Talents) and Senior executives.
However, for startups to obtain this type of visa the following conditions must be met:
|➤ Have created a startup in Thailand, certified as one of the targeted industries by relevant government agencies such as the National Innovation Agency (public organization) and the Digital Economy Promotion Agency|
|➤ Hold at least 25% of the company's registered capital or a directorship in the above-mentioned company|
|➤ Have a deposit of at least 600,000 Baht or equivalent in a bank account in Thailand or in the country of nationality or residence, held for at least 3 months|
|➤ In the case of being accompanied by spouses and children, an additional deposit amount of at least 180,000 Baht per person or equivalent is required in a bank account in Thailand or in the country of his/her nationality or residence, which has been held for at least 3 months|
|➤ To have a health insurance covering all the duration of the stay in Thailand for the applicant as well as his/her spouse and children|
As a startup, the smart visa will bring the following benefits:
|➤ Visa for a maximum of 2 years renewable|
|➤ No work permit required to work in the company certified by the competent agencies. In case of change of employment, additional visas according to the applicable requirements must be obtained|
|➤ 90-day report to Immigration at the One-Stop Service Center extended to 1 year|
|➤ No re-entry permit required|
|➤ Spouse and children granted permission to remain in Thailand for the same duration as the Smart visa holder. Spouse granted permission to work with no work permit required. Access to expedited service at Thailand's international airports (if applicable)|
If you decide to start an online business in the gaming industry, there are a few rules regarding data protection that you need to follow. All of these issues are regulated in Thailand, by the Personal Data Protection Act of 2019 (“PDPA”). This law regulates all processing of personal data in commercial transactions, including eCommerce.
|➤ You must not use an individual's personal data without their consent whether implied or express|
|➤ You may collect, use and disclose personal data only after you have informed the individual of the purpose of such data collection activities. You may not collect personal information simply because you have access to it|
|➤ You should only retain user data if there is a business reason to do so. There must be an explicit business purpose for such collection. This purpose must be considered appropriate by a reasonable person|
|➤ If the data used is to be disclosed to another organization, or to make a decision about the data subject, companies must ensure that all such personal data is accurate and complete|
|➤ Personal data should not be transferred outside Thailand if the jurisdiction to which the data is transferred does not provide legal protections comparable to the PDPA for the data subject|
If you create a startup in Thailand that operates one or more websites for the sale of its products or services, you must apply for an eCommerce license within 30 days after the start of business operations. The license application must be submitted to the Department of Business Development once the website is operational as the website owner will have to provide the following information:
|➤ Name of the site|
|➤ Nature of goods or services sold on the site|
|➤ The date the website starts/started operating (application must be made within 30 days of the start date)|
|➤ Method of payment for the purchase|
|➤ Document of domain name registration or certification document of the service provider|
If it is impossible to apply for a BOI (if the conditions are not met, if the BOI refuses to issue the license …), the foreigner can apply for a Foreign Business License if he meets the conditions in order to open his startup. An application for FBL, will then allow him to own 100% of the shares of a company located in Thailand. A foreigner who meets the criteria listed in the FBA will have to apply for a license, except for some activities which are not listed by the FBA. In this case, the business may be wholly owned by foreigners and will not require an FBL.