Corporate tax cuts on cards for SEZs

Corporate tax cuts on cards for SEZs

Choice between rate cut or BoI privileges

A trader loads construction steel for sale in Laos onto a ship at a river pier in Mukdahan province, opposite the Laotian province of Savannakhet. Mukdahan is among the first six provinces designated as a special economic zone. PATTARAPONG CHATPATTARASILL
A trader loads construction steel for sale in Laos onto a ship at a river pier in Mukdahan province, opposite the Laotian province of Savannakhet. Mukdahan is among the first six provinces designated as a special economic zone. PATTARAPONG CHATPATTARASILL

Factories located in special economic zones (SEZs) could see their corporate income tax halved to 10% for 10 years.

Government spokesman Yongyuth Maiyalarp said the cabinet yesterday approved the cut, aimed at attracting investment in SEZs and enhancing Thailand's regional competitiveness.

Investors qualifying for the corporate income tax reduction are required to put the money mainly in industrial categories that substitute for imports or focus only on exports or in sectors in which Thailand is less competitive.

Interested investors are required to submit their proposals before 2017.

However, Mr Yongyuth said investors asking for the corporate tax cut would not be eligible for promotional privileges recently approved by the Board of Investment (BoI).

A BoI meeting chaired by Prime Minister Prayut Chan-o-cha this month approved 61 categories from 13 industries to be located in SEZs that would be granted the highest promotional privileges.

The industries are agriculture, fisheries and related industries; ceramics; textiles, garments and leather; furniture; jewellery and ornaments; medical appliances; automobiles, machinery and parts; electrical appliances and electronics; plastics; pharmaceuticals; logistics; industrial estates; and tourism-related industries.

Previous promotional privileges under the BoI fell under zone-based incentives.

Investment in SEZs will be entitled to generous privileges including corporate income tax exemption for eight years, a 50% tax reduction on net profit from investment over five years, double tax deductions for the cost of transport, electricity and water supply for 30 years and an additional 25% tax deduction for the cost of installation or construction of facilities in addition to normal depreciation costs.

Other privileges include exemption of import duties on machinery, a five-year exemption for raw or essential materials for use in the production of exports and a permit for the employment of unskilled foreign workers at promoted projects.

The BoI also approved easing the requirements for the import of used machinery and doubling the maximum life of used machinery to 10 years.

In a move aimed at speeding up establishment of the SEZs, the government recently approved 24,871 rai in six provinces now owned by government entities to be developed into industrial estates or rented to private companies for such development.

Some of the land is owned by the Forestry and Treasury departments and state enterprises.

Some plots are overseen by the Agriculture Ministry.

Of the land, 14,858 rai is in Tak, 2,944 rai in Sa Kaeo, 740 rai in Trat, 1,085 rai in Mukdahan, 1,095 rai in Songkhla and 4,149 rai in Nong Khai.

The government also approved construction of a bypass road in Tak's Mae Sot district and a second bridge across the Moei River there worth a combined 3.9 billion baht as well as potential locations for the second phase of the government's SEZs.

The second phase includes 63 tambons in 16 districts, covering Nong Khai (22 tambons), Chiang Rai (21), Nakhon Pathom (13), Narathiwat (five) and Kanchanaburi (two).

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