• Zone 1 : includes Bangkok, Samut Prakan, Samut Sakhon, Nakhon Pathom, Nonhtaburi and Pathum Thani (Bangkok and 5 provinces)
• Zone 2 : includes Ang Thong, Ayutthaya, Chachoengsao, Chon Buri, Kanchanaburi, Nakhon Nayok, Phuket, Ratchaburi, Rayong, Samut Songkhram, Saraburi, and Suphanburi (12 provinces)
• Zone 3 : encompasses the remaining 58 provinces. Promoted industrial estates or industrial zones in Rayong Province shall be designated as Investment Promotion Zone III until December 31, 2009.

Non-Tax Incentives:

• Permission to own land for carrying out industrial activities (Section 44)
• Permission for foreign technicians, experts and spouse or dependents to stay in the country. (Section 45)
• Permission to bring foreign technicians and experts to work under industrial activities. (Section 46)
• Permission to take or permit abroad foreign currency. (Section 47)

• Exemption of Import Duty and Value Added Tax (VAT) on machinery, components, etc. and material imported for factory construction. (Section 48)
• Exemption of Import Duty and Value Added Tax (VAT) on raw materials (Section 49)
• Exemption of Export Duty and Value Added Tax (VAT) on exported goods (Section 50)
• Exemption or refund of Duties and Value Added Tax (VAT) for local goods utilized for production as follow section 48 and 49 (Section 52)

• Investors, both Thai and aliens, may be permitted to own land in industrial estate for their business, in accordance with the size as the IEAT Board deems fit, even though it may exceed the maximum limit provided for under other laws.
• Investors will be permitted to bring into the Kingdom alien skilled workers, experts, and their spouses and dependents in accordance with the number and duration of stay in the Kingdom as the IEAT Board deems fit.
• The alien skilled workers and experts, who have been permitted to stay in the Kingdom, will be permitted to work only the positions authorized period of stay in the Kingdom, will be permitted to work only the positions approved by the IEAT Board throughout their authorized period of stay in the Kingdom.

• Investors will receive privileges in accordance with items 1 to 4 as above for investors who set up their factories in the General Industrial Zone.
• Investors will be exempted from special fees in accordance with the law on investment promotion, import duties and VAT on machinery, equipment, tools and apparatuses, as well as component parts of the said items which are necessary for use in the production of goods and materials used in the construction, assemble or installation of factories or buildings.
• Investors will be exempted from special fees in accordance with the law on investment promotion, import duties and VAT on imported material for use in the production of goods.
• Investors will be exempted from export duties and VAT on imported materials as well as by products and other products from the production.
• Investors will receive tax exemption or tax reimbursements on materials in which there are laws granting tax exemptions or tax reimbursements upon export, even though they are not exported but are brought into the Export Processing Zone.

Export Promotion and Privileges from Customs Department

Free Zone
Free Zone is a designated area for industrial or commercial operation or any other operations involving in economic growth and development. Foreign and domestic merchandise removed into Free Zone is eligible for tax and duty privileges as indicated by the Law.

The Advantages of Using a Free Zone
All of the advantages a Free Zone Program can offer manufacturers and processors located in Thailand are numerous. A few main benefits that account for most of the companies that use a Free Zone Program are listed below:

1. Relief from Import and Internal Taxes/Duties:

Imported merchandise, removed into or manufactured in a Free Zone for industrial or commercial operations or any other operations involving economic growth and development, is not subject to import taxes and duties. This includes:

(1) Machinery, equipment, and parts;
(2) Foreign merchandise; and
(3) Merchandise transferred from other Free Zones.

Merchandise transferred from other Free Zones. In addition the imported merchandise removed into or manufactured in a Free Zone is also not subject to Value Added Tax (VAT), excise taxes, alcohol tax, including tax stamp and fees under the Alcohol Act, Tobacco Act, and Playing-Card Act. Additionally, a “ZEROEtax rate is applied to calculate VAT for domestic merchandise removed into a Free Zone, provided that such merchandise subject to export duty or exempted from export duty under the Customs Act.

2. Relief from Export Duty on Re-Exports:

Without a Free Zone, if a manufacturer or processor imports a component or raw material into Thailand, it is required to pay import taxes and duties at the time the component or raw material enters the country. However, a Free Zone is considered to be outside Thailand and Thai Customs territory. Accordingly, when foreign merchandise is brought into a Free Zone, no taxes and duties is owed until the merchandise leaves the Zone and enters Thailand for consumption. Only then is the merchandise considered imported and the duty paid. If the imported merchandise is re-exported to other countries, no Customs duty is charged.

3. Relief from Standard/Quality Control Requirements:

Merchandise or domestic raw materials removed into a Free Zone for manufacturing, mixing, assembling, packing, or any other operations is relieved from standard/quality control requirements or any other similar requirements; provided that such merchandise is re-exported to other countries.

4. Duty Exemption on Waste, Scrap, and Yield Loss:

If the processor or manufacturer is conducting its operations within a Free Zone environment, the merchandise is not considered imported, and therefore scrap, waste, or yield loss from an imported component is exempted from import and internal taxes and duties, if applicable.

5. Eligible for Export Tax Refund/Exemption Schemes:

Merchandise entitled to export tax refund/exemption schemes when exported is still qualified for such schemes after it is removed into a Free Zone.

Role of the Thai Customs Department
The Thai Customs Department is responsible for the removal or transfer of merchandise into and out of a Free Zone and for matters involving the collection of revenue. The Customs Privilege Bureau provides interpretations of the applicable statute, Customs regulations and procedures. The Bureau also is charged with overseeing Zone activities as the representative of the Thai Customs Department. It controls the admission of merchandise into the Zone, the handling and disposition of merchandise in the Zone, and the removal of merchandise from the Zone. Free Zones are supervised by Thai Customs officers through periodic checks and visits; and the security of the zone must meet certain requirements. In addition, the Tax and Duty Privilege Bureau, through an established Board, is also responsible to review and approve applications to establish, operate, and maintain a Free Zone. The Board also regulates the administration of the Zone and approves activation of the Zone before any merchandise is admitted into the Zone.

To attract the Small and Medium Size Enterprises (SMEs) in joining the Free Zone Scheme, Customs has extended a tax and duty privileges granted to business operators in Free Zones as follows:

Conditions Granting Tax and Duty Privilege: Customs has reviewed and revised conditions set out in the tax and duty privilege scheme to extend privileges to and attract more SMEs operators and One Tambol One Products (OTOP) operators.

Laws and Regulations on Import/Export License: As requirement for import/export licenses complicates import/export procedures under the Free Zones scheme, Customs has reviewed and revised laws and regulations to waive import/export licenses for prohibited and restricted goods removed into Free Zones and re-exported to other countries to ensure that Customs services are being provided in the Free Zones with maximum speed and efficiency.

Laws and Regulations on Standard and Quality Control: To extended privileges and reduce business transaction costs for business operators in the Free Zones, requirements for standard and quality control for goods removed onto the Free ones are relaxed. Exempting from standard and quality control allows the business operators in the Free Zones to gain more competitive advantages and subsequently generate more income to stimulate economic growth and development in Thailand.

Laws and Regulations on Hazardous Goods: The revised laws and regulations on hazardous goods empower Customs to control the hazardous goods removed into the country that may harm people, animals, plants, properties, or environment.

Reduction of Customs Duty: Goods removed from the Free Zones or export processing zones for domestic consumption will be subject to the same rate of tax and duty granted to similar imports under the ASEAN Common Effective Preferential Tariff Scheme.
 

For more information, please visit www.customs.go.th.