Board of Investment has introduced new incentives to help SMEs

Thailand’s Board of Investment (BOI) has introduced a new package of tax incentives to help small and medium-sized enterprises (SMEs) modernize and remain competitive as they face increasing global trade tensions and domestic economic pressures.

The most significant change is an expanded corporate income tax exemption for BOI-promoted SMEs. Eligible businesses that invest in technology upgrades, automation or environmentally friendly improvements can now receive a five-year tax exemption equal to 100% of their investment. Previously, the benefit was limited to three years and capped at 50% of the investment value.

The changes were introduced in response to external economic challenges, including trade protectionism such as the 36% U.S. tariff on certain imports from Thailand. BOI officials say the aim is to make Thai SMEs more resilient by encouraging innovation and higher value-added production, particularly in industries like electronics, metalworking and automotive components.

To further support regional development, the BOI has also approved enhanced incentives for tourism infrastructure projects in 55 so-called second-tier provinces. Investors in hotels and related tourism businesses in these areas will now qualify for five years of corporate tax exemption, up from the previous three years. The measure is designed to attract private investment to less-developed provinces and distribute tourism revenue more evenly across the country.

At the same time, the BOI has suspended investment promotion for sectors deemed oversaturated or harmful to the environment. These include solar panels, battery cell production, lead-acid batteries, certain auto parts and specific steel products such as steel pipes and hot-rolled steel. Officials say these sectors have drawn excessive low-value investment and often lack the local economic benefit or technological advancement the government seeks to encourage.

Stricter employment rules have also been introduced for foreign-invested firms operating in Thailand. Companies with over 100 employees must now ensure at least 70% of their staff are Thai nationals. Foreign executives applying for work permits must earn a minimum of 150,000 baht per month, while specialists must receive at least 50,000 baht. These requirements are aimed at protecting local employment and ensuring foreign investment contributes meaningfully to skills development.

While tightening standards in certain areas, the BOI continues to support strategic investments in digital infrastructure and renewable energy. Between January and March this year, the board approved 27 data center projects worth over 240 billion baht, alongside two new wind power generation facilities.