Thailand's international headquarters (IHQ) incentives are set to attract more foreign companies looking to expand in Asean, says KPMG (Thailand).
"Globally, companies are beginning to consolidate their service functions for their business ventures to save costs," said partner Benjamas Kullakattimas. "So Thailand stands to benefit from this trend."
The incentives under IHQ are comparable with those offered in Malaysia and Singapore, she said, thanks to far-lower living costs here.
"Meanwhile, the corporate income tax exemption from income abroad is very attractive," Mrs Benjamas said. "Companies are particularly interested in a personal income tax reduction for foreign employees."
IHQ is seen as an improvement on the previous regional operating headquarters (ROH) incentives and their burdensome requirements.
Because Thailand sits in the middle of mainland Asean, setting up headquarters here also gives companies access to nearby markets such as Myanmar, Laos and Cambodia.
"It is too early to gauge the interest of international companies because the IHQ scheme was launched just recently," Mrs Benjamas said. "We have to wait until next year for a clearer picture to emerge."
State agencies at first may be overwhelmed with applications, and a lack of resources could create bottlenecks in certain processes.
So far, 30 applications for IHQ have been submitted to the Board of Investment.
Ten of the 30 worked with KPMG, a professional services company, on their submissions.
"Applicants come from many sectors, such as manufacturing, consumer products and energy, but manufacturing represented more than half," Mrs Benjamas said.
Singapore and Malaysia have one agency to accept applications. In Thailand, companies have submitted applications at up to three different agencies for incentives.
"IHQ also limits certain operations that companies can do," Mrs Benjamas said. "For example, companies can only advise subsidiaries in accounting but cannot do it for them."