I. Three Main Aspects of the 2025-2026 BOI Policy

Thailand's Board of Investment (BOI) has explicitly identified "Smart Manufacturing," the electric vehicle (EV) supply chain, semiconductors and advanced electronics, and aerospace components as priority investment targets for 2025-2026. Investment projects falling into these categories are eligible for A1 or A2 category incentives (up to 8 years of tax exemption) and additional double deductions for automation equipment and R&D expenses. For foreign companies currently engaged in electronic component manufacturing in Vietnam and considering relocating their factories to Thailand, now is the golden window to apply for the BOI's high-preferential categories.

The Thai government strongly promotes the BCG (Bio, Circular, Green) economic model. Investment projects that meet the criteria of circular manufacturing, low-carbon production, or the application of bio-based materials can apply for additional tax exemptions based on the level of technology and R&D investment, on top of the existing BOI (Business of the Industry) incentives (the total tax exemption period can be capped at 13 years). In addition, the Thai Inland Revenue Department offers a separate 200% tax credit for R&D expenses (according to Royal Decree No. 598). However, this incentive and the BOI's business promotion tax incentives are mutually exclusive and cannot be applied for simultaneously. Companies must choose one and are advised to consult with a local advisor before planning to determine which option is more favorable for the overall tax burden.

In the past, the BOI's incentives for "digital system implementation" were mostly processed on a project basis. Starting in 2025, the investment costs of ERP, MES, and supply chain digitalization systems will be included in the formal expense deduction program. Foreign companies that set up factories in Thailand and simultaneously implement digital management systems can not only receive bonus points for their BOI applications, but also effectively reduce their tax burden.

II. Key Changes in Application Requirements

Companies applying for A1/A2 categories who wish to further qualify for the additional benefit of "unlimited tax exemption" must invest no less than 1% of their sales revenue (or 200 million Thai Baht, whichever is lower) in R&D expenses within the first three years after approval, and these expenses must be actually implemented within Thailand (and cannot be included in the parent company's R&D expenditures). Companies that do not meet this threshold can still obtain the basic 8-year tax exemption benefit of A1/A2, but the tax exemption amount will be subject to the general upper limit.

Some manufacturing categories are required to commit to sourcing a certain percentage of raw materials or components locally in Thailand, and the BOI has begun requiring companies to submit annual procurement tracking reports.

Starting in 2025, BOI applications will be entirely online (e-Investment Portal). Application documents must be submitted electronically in English or Thai, along with a financial forecasting model. The previous process of "paper submission and in-person interview" is now a thing of the past.

III. What changes have occurred in the A3/A4 categories, which are most frequently applied for by foreign-invested enterprises?

The A3 (General Technical Activities, 5-year tax exemption) and A4 (Low-Technology Manufacturing, 3-year tax exemption) categories, previously commonly used by foreign companies, have not been eliminated in the 2025-2026 policy adjustments. However, the BOI's review focus has shifted from "capital size" to "technology content and job creation." Companies applying for A3/A4 status that cannot clearly articulate their technology upgrade plans for their investment projects will face significantly increased approval difficulty; conversely, those that can present plans for the implementation of automated processes or digital management systems will see a substantial increase in their approval rate.

IV. Three Key Preparations Before Applying for Foreign Investment Enterprise Status

Do not make your own judgment. It is recommended to entrust a BOI consultant in Thailand to classify and confirm the application. Incorrect classification will lead to application failure and delays in the resubmission process.

The BOI review committee highly values the contribution of investment to employment in Thailand and recommends that the annual growth in the number of Thai employees be clearly presented in the financial model.

BOI tax exemption is based on purchases made after the approval date. Equipment purchased in advance cannot be included in the tax exemption scope, which is the most common time sequence error made by foreign companies.

Thailand's BOI (Business of Investment) still offers top-tier incentives among Southeast Asian countries, but its policy direction is becoming increasingly clear: Thailand is looking for investors who bring technology and upgrade plans, rather than simply labor-intensive factory relocations. If foreign companies can develop a sound application strategy, the BOI will remain the most powerful accelerator for expanding their presence in Thailand.