Introduction

The Thailand Board of Investment (BOI) has introduced the Smart & Sustainable Industry measure as part of its Investment Promotion Strategy 2023–2030. This initiative reflects the Thai government’s commitment to strengthening industrial competitiveness while encouraging environmentally sustainable practices and digital transformation. Central to this measure are significant tax incentives, aimed at both existing enterprises seeking to upgrade their operations and new projects that align with the principles of automation, energy efficiency, and environmental responsibility.

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Effective Date and Policy Framework

The measure has been in force since 3 January 2023, marking the beginning of a new era in Thailand’s industrial policy. It is structured to provide businesses with a concrete pathway to achieve higher levels of efficiency while simultaneously reducing their environmental impact. Importantly, the incentives under this scheme are not confined to new entrants; they extend also to existing businesses that may not have previously enjoyed BOI privileges but are now willing to undertake meaningful improvements in line with sustainability and Industry 4.0 criteria.

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Tax Incentives for Existing Projects

The tax incentives are particularly compelling. Existing projects that undertake efficiency-enhancing upgrades are entitled to three years of corporate income tax (CIT) exemption. The scope of this exemption is directly linked to the amount invested in qualifying improvements, with eligible expenditures covering a wide range of technology and automation enhancements. In certain cases, the exemption may apply to as much as 100 percent of the qualifying investment. This structure encourages established businesses to reinvest in their operations while remaining competitive in the evolving global market.

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Enhanced Benefits for SMEs

For small and medium-sized enterprises (SMEs), the benefits are even more generous. SMEs that meet the criteria are entitled to five years of CIT exemption, with full coverage of their investment in efficiency improvements. This preferential treatment reflects Thailand’s broader policy of supporting SMEs as key drivers of the national economy while simultaneously raising their competitiveness to international standards. The extended exemption period provides SMEs with crucial support in financing long-term upgrades and achieving sustainable growth.

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Opportunities for New Projects

New projects are likewise eligible for tax privileges under the measure. Companies that adopt automation, robotics, or other Industry 4.0 technologies, and which align their operations with sustainability standards, may obtain tax exemptions on similar terms to those granted to existing projects. In addition, import duties on machinery used in the qualifying upgrades are waived, thereby reducing the upfront costs of modernization. These provisions ensure that the measure is not only a tax benefit but also a substantive industrial policy tool, assisting enterprises in both financial and operational aspects of their transformation.

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Compliance and Certification Obligations

It is equally important to note that these incentives come with compliance obligations. Projects must adhere to international standards of sustainability, whether in energy efficiency, use of renewable energy, or environmental management systems. Certification and continued compliance are not merely formalities; they are conditions for maintaining the benefits. The BOI retains the authority to withdraw tax privileges if a company fails to uphold these obligations. Furthermore, certain categories of expenditure, such as land acquisition or working capital, are excluded from the eligible investment base, underscoring the BOI’s intention to direct incentives toward genuine technological and sustainable improvements.

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Broader Implications for Industry

The implications of this policy are far-reaching. For existing businesses, the Smart & Sustainable Industry measure reduces the financial burden of modernization, effectively shortening the payback period for costly investments in automation and environmental technologies. For SMEs, the extended exemption period provides vital breathing room to expand capacity and strengthen competitiveness. For new investors, the policy signals Thailand’s openness to sustainable and technology-driven industries, offering tangible support for projects that align with the country’s long-term strategic vision.

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Alignment with Global Trends

At the same time, the measure reflects Thailand’s alignment with global industrial trends. As international markets increasingly demand compliance with sustainability standards, and as supply chains move toward lower carbon footprints, Thai enterprises must adapt or risk losing competitiveness. The BOI’s initiative ensures that businesses operating in Thailand are not left behind in this global transformation. By combining fiscal incentives with regulatory obligations, the policy creates a framework that both rewards and requires progress toward sustainability and advanced industrial practices.

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Conclusion

In conclusion, the BOI’s Smart & Sustainable Industry measure provides a comprehensive blend of tax incentives and regulatory direction. It demonstrates Thailand’s determination to support businesses in adopting sustainable practices, integrating automation, and achieving international standards. For companies prepared to invest in these areas, the rewards are substantial, not only in terms of immediate tax relief but also in terms of long-term competitiveness in regional and global markets.

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How ILAW ASIA Can Assist

At ILAWASIA, we recognize that the opportunities presented by the BOI’s Smart & Sustainable Industry measure come hand in hand with complex regulatory requirements. Our firm provides comprehensive legal and tax advisory services to ensure that investors fully understand and maximize these benefits. We assist clients in determining eligibility, structuring applications, securing BOI approvals, and maintaining compliance with sustainability and environmental standards. Beyond the application process, we also advise on long-term compliance strategies, risk management, and the integration of BOI privileges into corporate tax planning.

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With over 18 years of professional experience across Thailand, Myanmar, Cambodia, and Laos, ILAWASIA is well-placed to guide both domestic and international clients through the intricacies of BOI promotion schemes. By combining deep local knowledge with a cross-border perspective, we help our clients turn policy incentives into practical advantages, ensuring that their investments are both legally sound and commercially successful.