TL;DR Commercial lease agreements in Thailand are governed by strict registration rules, common three-year terms, and varied landlord practices. Registering leases longer than three years is recommended for tenant protection. Renewal clauses, key money, due diligence, and tax obligations all need careful review to avoid costly risks and safeguard long-term business operations.

Introduction:

As foreign and local businesses continue to expand in Thailand, securing the right commercial premises is a fundamental step. Whether for office space, retail, or industrial use, the terms of a commercial lease agreement will significantly influence operations, costs, and long-term stability.

In this article, we examine the legal framework, standard practices, and practical considerations surrounding commercial lease agreements in Thailand.

Key Points

• Leases exceeding three years must be registered with the Land Office to remain enforceable; unregistered leases are only valid for up to three years regardless of the written term.
• Three-year leases are common practice to avoid registration, but they carry risks such as uncertain renewals, sudden rent increases, or forced relocation.
• Key money is a customary but unregulated payment in commercial leases, often demanded upfront or at renewal, and should always be carefully negotiated.
• Long-term leases require land to be zoned for commercial or industrial use and tenants to meet strict investment thresholds, ensuring projects contribute to Thailand’s economic development.
• Tenants cannot transfer or sublease without landlord consent, but if the landlord sells, the new owner is bound by the existing lease, making registration important for tenant protection.
• Leases typically allow termination by landlords for default, with a negotiated cure period, while tenants are generally bound for the full term unless the landlord breaches the agreement.

The Legal Framework for Commercial Leases

Commercial leases in Thailand are primarily governed by the Civil and Commercial Code and, for certain cases, the Lease of Immovable Property for Commercial or Industrial Purposes Act 1999. These laws set out the rights and obligations of both landlords and tenants, providing a regulatory framework for transparency and enforceability.

Under Thai law, the maximum lease term for land or buildings is 30 years. However, certain special laws, such as the Eastern Economic Corridor Act or the 1999 Lease Act, allow for leases of up to 50 years if the property meets commercial or industrial requirements.

Leases of more than three years must be registered with the Land Office to be enforceable. Without registration, a lease will only be recognised for three years, even if a longer term is agreed in writing.

Due Diligence

Before signing a lease agreement, it is advisable to conduct proper due diligence to confirm that you are dealing with the legitimate owner and that the property can legally be rented. Tenants should check to confirm that the landlord is the rightful owner of the property or an authorized representative of the landlord or company who owns the property.

Proper due diligence involves reviewing documents such as the land title deed (Chanote), the house registration book, and, if applicable, the company registration documents of the property owner. These records confirm ownership and the landlord’s legal right to lease the premises.

It is also important to ensure that no other leases or rights have been previously registered over the property that could conflict with your intended use. A lawyer can undertake a due diligence review to check the property’s legal status, confirm that the title is free from encumbrances, and verify that no third-party claims or prior lease registrations exist.

Lease Terms and Renewal Options

A standard commercial lease in Thailand typically runs for three years, sometimes with an option to renew for a further three. While parties may agree to renewal terms for longer leases, enforcement can be difficult if the renewal clause is poorly drafted. Renewal options must therefore be carefully structured to avoid disputes.

Businesses often negotiate for a rent-free fit-out period of one to three months before the lease commences, giving tenants time to prepare the premises for operations.

It is also important to note that once a lease expires, tenants do not have an automatic right to remain. If they continue occupation with the landlord’s consent, the law considers the lease to have been extended for an indefinite period, subject to the landlord’s right to terminate at any time.

The Common Practice of Three-Year Leases

In Thailand, it is common practice for businesses to structure leases as a three year agreement rather than a longer-term lease. This is often done to avoid additional registration requirements, as leases exceeding three years must be officially registered with the Land Department to be enforceable after the third year. Some businesses also structure leases in such a way in order to avoid certain fees, even though the registration fee is not especially high at just 1.1% of the total lease value.

However, if the premises are important to the businesses operations, the business should negotiate lease terms upfront during the acquisition process. Whenever possible, consider trying to obtain extended lease rights directly from the property owner. A registered lease provides stronger legal protection, allowing for a longer lease term and ensuring that your lease rights remain intact even if the landlord sells the property or faces legal issues.

As part of the purchase agreement, it is advisable to include a clause that allows you to negotiate a direct lease with the property owner. 

Unprotected leases can lead to issues later, as there is no guarantee that the landlord will agree to renew the lease under the same terms, or at all. They may also choose to increase the rent or impose unfavorable conditions during renewal negotiations.

Without a long-term lease in place, the businesses ability to operate properly could be disrupted. Additionally, unexpected relocation expenses could be significant and have a big effect on the company’s profitability.

Renewal Risks

While many landlords or agents may offer renewal options for up to two or three additional terms, these arrangements can be misleading and unenforceable. Under Thai law, any lease that is longer than three years must be registered with the Land Department to be legally enforceable beyond that period.

Requiring leases longer than 3 years to be registered with the land office has a knock-on effect for renewal clauses. This is because a renewal clause is essentially extending the term of the lease beyond three years, which without registration, may be considered invalid or unenforceable.

It is also important to note that certain practices, such as pre-signing multiple three-year lease agreements with future dates, are illegal. Additionally, relying on multiple pre-signed leases can create significant risks for the lessee. For example, if the property changes ownership or the landlord refuses to honor the subsequent lease terms, the lessee would have no legal recourse and may be forced to vacate the premises.

If a long-term registered lease is not possible, tenants should at least negotiate a clearly defined option to enter into a new lease agreement upon expiry. This option should specify key terms such as duration, rental rate, and renewal procedure. Properly drafting this option agreement is highly important as it makes sure the option is a binding commitment rather than an invitation to renegotiate.

Finally, if a lessee has made a significant investment in the property, such as renovations or fit-outs, tenants are also recommended to negotiate protective clauses limiting potential rent increases upon renewal. For example, setting a cap on the new rental rate can help protect the business against unexpected rent increases.

What is Key Money in Thailand?

Key money is a common but not clearly defined concept in Thailand’s rental and lease agreements for commercial property deals. Key money can relate to different payments, including:

• A fee paid to an existing tenant for assigning a lease at a below-market rental price.
• A direct payment to a landlord, 
• A security deposit (usually non-refundable).

In many cases, key money is simply part of the overall lease price, often used as an upfront lump sum payment in exchange for a lower monthly rent. Since key money is usually not declared as part of the renting price, the actual declared rental value is often lower than the market price. Landlords may also require key money again when renewing a lease.

It’s important to note that key money is not a legal requirement under Thai law. It is a common practice used by tenants or landlords to assign lease rights or secure access to a property, but there is no official regulation. 

If you are asked to pay key money, it’s important to understand exactly what is included in the deal and whether it is actually necessary. Key money should always be negotiated carefully, ensuring that you are not paying for something you could otherwise obtain directly from the landlord or through a more favorable lease agreement.

Long-Term Commercial and Industrial Leases

In Thailand, long-term leases for commercial or industrial purposes are available however it is subject to strict regulatory conditions designed to balance investor interests with national economic development goals. 

Unlike standard leases, which are capped by the Civil and Commercial Code, long-term leases for eligible businesses may be eligible for lease terms of up to 50 years in certain cases. 

However, eligibility is not automatic. Both the land itself and the activities to be conducted must satisfy strict criteria set out in town planning regulations and relevant investment laws. To qualify for a long-term commercial or industrial lease, the land must be:

• Zoned for commercial or industrial use under town planning laws, or
• Located in an industrial estate zone managed by the Industrial Estate Authority of Thailand.

In addition, the tenant company must meet specific investment criteria. For example:

• Commercial activities with investment of at least THB 20 million;
• Industrial activities promoted under the Investment Promotion Act; or
• Projects deemed beneficial to Thailand and approved by the Cabinet.

Where the lease area exceeds 100 rai (160,000 sqm), the business must also demonstrate wider economic or social benefits, such as export promotion, advanced technology, or employment generation.

Language Requirements for Lease Agreements

Lease agreements can be drafted in English for private use. However, if the lease is to be registered at the Land Office, a Thai version will be required. Typically, a bilingual agreement is prepared, with the Thai text prevailing in case of discrepancies.

Land Officers may also review the agreement during registration and reserve the discretion to reject certain clauses. Parties should therefore ensure that the lease complies with local practice.

Rental Payments, Deposits, and Fees

Rental structures vary by property type. Office and industrial leases generally use fixed monthly rent, while retail leases may include turnover-based rent.

Security deposits are standard, typically between one to three months’ rent, provided either in cash or as a bank guarantee. Tenants are also usually responsible for ancillary charges, such as utilities, common area maintenance, and property taxes.

Where the lease exceeds three years, registration fees of 1% of the total rental plus 0.1% stamp duty apply.

Repair and Maintenance Requirements

In most cases, unless expressly stated otherwise, tenants will be responsible for minor repairs and maintenance, while landlords remain responsible for major structural repairs. In practice, however, especially in long-term or large premises leases, tenants may be expected to take on greater responsibility for major repairs.

When negotiating a rental agreement, it is recommended to clarify responsibility for specific items such as air conditioning systems. While air conditioning repairs are normally the landlord’s responsibility, it is a good idea to expressly state this in the lease to avoid any potential disputes.

Other important areas to address in the lease agreement include provisions for issues arising from broken equipment or machinery that is not in proper working order. For example, if a lessee encounters a malfunctioning or leaking air conditioner, or other major problems such as structural defects that result in the premises becoming unusable, these should be clearly addressed in the contract. Tenants should make sure that the lease includes a clause granting the right to terminate the agreement if such a situation occurs and is not quickly repaired, as this would make the premises unfit for use.

Consent for VAT and SSO Registration

When leasing a property to be used as an office or place of business, it is highly likely that the company will need to register with the Social Security Office and, potentially, for VAT.

As part of the application process, officers may request photos of the office showing the company name and, in some cases, even request an on-site inspection to confirm the business location.

It is recommended that before agreeing to leasing an office to make sure that your landlord agrees to let you use the premises for VAT registration. This is important because the Revenue Department requires an original letter of consent from the property owner and, if the office is located in a managed building, an additional letter from the building’s juristic person. 

As well as the written confirmation from the landlord/juristic office the Revenue Department required the following documents, a copy of the lease agreement, a business plan, and a map highlighting the location of the office. 

Please also note that if you operate multiple businesses and wish to register each of them at the same address, this should also be included in the lease agreement. Each business registration requires separate written consent from the property owner (and, if applicable, from the building’s juristic person), so it is advisable to ensure these consents are clearly documented from the start.

Tax Considerations

When leasing commercial property in Thailand, both landlords and tenants must be aware of the tax requirements in relation to rent. It is important to have a clear understanding of how the payment of these taxes will be split between the landlord and lessee.

The most important tax to be aware of is the 5% withholding tax on rent (commonly referred to as the “building tax”). When the property owner is a registered company, the tenant is required to withhold 5% of the total rent payment and submit this amount to the Revenue Department on the landlord’s behalf.

This withholding tax is a mandatory obligation and is typically deducted from the rental price rather than added on top. However, some landlords may try to reduce the WHT tax amount by arranging the arrangement as a service agreement rather than a rental agreement.

Under Thai tax law, service contracts are subject to only 3% withholding tax, rather than the 5% for rental agreements. However, this approach may not be suitable for all businesses. For example, companies that have received a BOI promotion must record office rental costs properly in their accounting books as “rental expenses” to comply with legal and tax reporting requirements. Booking the rental payment as a service expense could create problems during audits or BOI reviews.

One potential solution would be to structure the lease as a type of hybrid agreement, where one section of the contract covers the actual lease of the premises and another section relates to additional services, such as building maintenance, common area fees, or administrative support.

If this type of structure is chosen, both parties should clearly state the division of rent and service fees and the corresponding withholding tax rates (5% for rent, 3% for services).

To avoid potential disputes or issues with the booking of a lease, it is recommended to consult with our qualified accountants and experts. Properly structuring the agreement from the beginning can help prevent disputes and issues later down the line.

Transfer and Subleasing

Under Thai law, tenants are generally not permitted to transfer their lease rights or sublease the property without first obtaining the landlord’s prior written consent. This restriction is intended to give landlords control over who occupies or uses their property, ensuring that the premises are not handed over to a third party whose activities, financial standing, or 

On the other hand, landlords themselves may transfer their ownership of the leased property, either through sale, inheritance, or other legal means. In such cases, the law provides clear protection for tenants: the new owner automatically steps into the shoes of the former landlord and assumes all rights and obligations under the existing lease. 

To further protect a tenants’ interests, it is strongly recommended that leases are formally registered with the Land Office. Registration gives the lease legal enforceability against third parties, meaning that even if the property changes ownership, the tenant’s rights remain secure for the full term of the registered lease. Without registration, tenants risk losing enforceability against new owners and may face uncertainty in the event of a property transfer.

Terminating Commercial Leases

Leases usually allow landlords to terminate the agreement if tenants default on rent or breach key obligations. A remedy period of 30–90 days is often negotiated to give tenants time to cure the breach before eviction.

Tenants rarely have the right to unilaterally terminate early unless the landlord is in breach. Unless otherwise agreed in the lease, tenants are bound to the full contractual term.

Our Thoughts

Commercial lease agreements in Thailand are shaped by complex registration requirements, and market practice. While landlords often prefer short three-year leases, tenants benefit from registering longer terms to secure stability and enforceability.

Businesses entering into leases should carefully consider renewal clauses, language requirements, and the allocation of responsibilities for repairs and costs. Most importantly, proper registration ensures long-term protection, especially where significant investments are tied to the premises.

For foreign investors and businesses, navigating these requirements is critical to safeguarding commercial interests in Thailand’s competitive property market.

Please note that this article is for information purposes only and does not constitute legal advice

TL;DR Thailand has introduced major changes to rental contracts or residential leases for residential properties. The new regulations address long-standing complaints from tenants about unfair practices in rental contracts, including unjustified forfeiture of security deposits, excessive utility charges, and lack of clarity over rights and obligations. On 6 June 2025, the Contract Committee of the Office of the Consumer Protection Board (OCPB) issued updated rules that came into full effect on 4 September 2025, repealing the earlier 2019 notification.

Introduction:

Thailand’s consumer protection authorities have introduced an update to the regulation of residential leases. This regulation has been introduced to address long-standing complaints from tenants about unfair practices such as unjustified forfeiture of security deposits, excessive utility charges, and lack of clarity over rights and obligations in lease agreements.

On 6 June 2025, the Contract Committee of the Office of the Consumer Protection Board (OCPB) issued the Notification of the Contract Committee Re: The Stipulation of Residential Property Leasing as a Contract-Controlled Business B.E. 2568 (2025). The notification came into full effect on 4 September 2025, repealing the earlier notification issued in 2019.

Key Points

• The new rules now apply to businesses leasing 3 or more residential units (reduced from 5), bringing more landlords under legal protection requirements.
• All lease agreements must be in Thai language with clear formatting, include detailed property information, and attach a signed move-in inspection report with both parties’ signatures.
• Security deposits must be returned immediately upon lease end, or within 7-14 days if inspection/repairs are needed, with limits on advance payments (maximum 3 months for monthly contracts).
• Tenants can terminate fixed-term leases early after occupying the property for at least 50% of the lease term with 30 days’ notice, while landlords must give a minimum 30 days’ notice to terminate.
• Businesses violating these rules face criminal liability including up to one year imprisonment and fines up to THB 200,000, with the regulations already in full effect since September 4, 2025.

What Are the New Rental Contract Requirements?

One of the biggest changes introduced by the notification is the expansion of the scope of application. The previous 2019 notification applied only to businesses leasing five or more residential units. Under the 2025 notification, the requirements have now been reduced to three or more residential units. 

By reducing the number of leased buildings required, a greater number of landlords and property operators will now receive legal protection. 

While the notification applies to businesses, it is important to note that hotels, serviced apartments, and dormitories remain excluded from the notification because they are regulated under other specific laws.

Recognition of Electronic Documents

Another important update is the notification’s recognition of the growing role of technology such as electronic signatures in rental transactions. 

Under the new regulations, any lease contracts or tenancy agreements executed electronically, e.g. through online rental platforms or via electronic signatures, must comply with the notification’s requirements and with the Electronic Transactions Act of Thailand. 

This has been done to close regulatory gaps and to ensure that electronically executed lease agreements receive the same legal recognition and protections as paper-based agreements. 

It is important to note that any existing lease contracts that satisfy the previous 2019 rules will remain valid until they expire. However, all new lease agreements executed on or after 4 September 2025 must comply with the new framework.

Mandatory Contractual Requirements

The notification established a set of mandatory requirements that must appear in residential lease agreements. The new mandatory requirements are as follows:

Contract Language and How Rental Contracts Must Be Formatted in Thailand

Rental contracts and tenancy agreements must be written in Thai language, with text printed in a clear, easy-to-read font size, at least 2 mm tall and no more than 11 characters per inch. 

Each contract must also clearly identify the parties or their representatives, provide up-to-date contact details, describe the leased property, and specify the rental fee, service charges, deposits, lease term, utility rates, and payment methods.

An English version of the contract may be prepared alongside a Thai version; however, in the event of any dispute, the Thai language version shall prevail and be the version used by the Thai courts and during any negotiation.

Transparency and Supporting Documentation

To improve transparency between the parties, landlords must now deliver written invoices for rent, utilities, and service fees at least three days before the payment due date. Lessees also now have the right to inspect the supporting documentation for utility and service charges to ensure accuracy.

Additionally, a move-in inspection report must be attached to the lease agreement, providing a clear record of the property’s condition at the start of the tenancy. Photographic evidence may also be included. The inspection report must be signed by both parties.

Return of Security Deposits

The notification also offers new protections relating to the return of security deposits. Lessors must return the deposit immediately upon the end of the lease.

If an inspection is required, the deposit must be returned within seven days if there is no damage, or within 14 days after deducting legitimate repair costs if required. Landlords remain responsible for repairs except for minor wear and tear or damage caused by force majeure.

Early Termination and Landlord Obligations

The notification also grants lessees the right to terminate a fixed-term lease early, provided that they have occupied the property for at least 50 percent of the lease term. In order to do so, they must give 30 days’ prior notice and settle any outstanding payments.

If a landlord wishes to terminate the lease agreement, they are required to give a minimum of 30 days’ notice before terminating a lease (or at least seven days in cases involving urgent misconduct affecting other tenants). Immediate termination is permitted only in cases where public order or morality is at stake.

Implied Legal Protections

If any of these mandatory terms are omitted from a lease, the law will imply them into the contract. This means that even if a landlord uses a non-standard lease template, they cannot exclude these minimum protections.

Prohibited Contract Terms

The notification also establishes provisions that identify which terms and conditions are prohibited from being included in tenancy agreements. Any of the following prohibited terms that appear in a contract will be considered void and have no legal effect, even if the tenant signed the lease.

Limits on Advance Rent and Deposits

Landlords may collect:

• Up to three months’ rent for short-term contracts or long-term contracts with monthly rental payments.
• Up to one year’s rent for long-term contracts with annual payments.

Anything greater than these limits is not permitted.

Restrictions on Rent Increases and Charges

Landlords are prohibited from:

• Increasing rent or service charges before the lease expires.
• Confiscating deposits without tenant fault.
• Entering the property without prior notice (except in emergencies).
• Charging utility rates above official government tariffs.

Unenforceable Contract Terms

The following types of clauses are considered void and unenforceable:

• Holding tenants liable for normal wear and tear or damage beyond their control.
• Lockouts or seizure of tenant property.
• Charging “renewal fees.”
• Terminating a lease without a material breach by the lessee.
• Holding tenants liable for normal wear and tear or damage beyond their control.

Consequences for Non-Compliance

Failure to comply with the notification could result in serious consequences for the offending party. Businesses who breach these rules may face criminal liability under the Consumer Protection Act, including imprisonment for up to one year, fines of up to THB 200,000, or both.

What does this Mean for Landlords and Property Management Companies?

The September 2025 compliance deadline has now passed, meaning landlords and property managers should already have reviewed and updated their lease agreements to meet the new requirements.

Any template contracts should have been updated, and deposit handling procedures, invoicing practices, and online leasing systems must be updated to make sure that they meet the requirements of the new regulation. 

If these updates have not been completed yet, it is highly recommended to do so as soon as possible. Non-compliance can result in landlords facing legal risks, as well as significant criminal penalties.

Landlords, property managers, and investors who would like additional information or advice on how best to update their rental contracts or understand Thailand’s leasing framework can speak with us for tailored guidance. More details are available on our real estate services page.

Please note that this article is for information purposes only and does not constitute legal advice

TL;DR Thailand’s recent approval of a 200% tax deduction for SMEs’ digital transformation marks a pivotal advancement in supporting small to medium enterprises. This tax deduction not only alleviates financial burdens associated with adopting digital technologies but also fosters innovation and competitiveness within the market. By investing in essential digital tools, SMEs can improve operational efficiency and drive growth through informed decision-making. As a result, this initiative plays a crucial role in enhancing the overall economic landscape of Thailand by empowering business owners to embrace digital solutions.

Introduction:

On 24 June 2025, the Thai Cabinet approved a new income tax incentive designed to accelerate the digital transformation of small and medium-sized enterprises (SMEs). Under the proposed Royal Decree, eligible businesses can claim a 200% tax deduction on qualifying digital expenses, up to a cap of ฿300,000, incurred between 24 June 2025 and 31 December 2027.

This measure forms part of the government’s wider strategy to build and develop a strong digital economy and promote competitiveness among Thailand’s SMEs, which represent a significant portion of the Thai economy.

Key Points

• 200% tax deduction available for SMEs who can claim double the value of qualifying digital expenses as a tax deduction, capped at ฿300,000 per business until December 2027.
• Only SMEs with paid-up capital under ฿5 million and annual revenue below ฿30 million qualify for the incentive.
• All qualifying digital products and services must be registered and approved by the Digital Economy Promotion Agency to be eligible for deductions.
• Deductions apply to registered digital software, smart devices (excluding general computers), digital business services, and DEPA-approved computer programs.
• SMEs must maintain official tax invoices, proof of payment, and DEPA registration confirmation to successfully claim deductions during tax filing.

Who is Eligible to This Tax Deduction?

The tax incentive is aimed at SMEs formally registered in Thailand. To qualify, businesses must meet all of the following financial criteria:

• Paid-up capital of not more than ฿5 million at the end of the accounting period
  
• Annual revenue from sales and services of not more than ฿30 million

This definition aligns with standard SME classifications under Thai tax regulations and ensures the incentive specifically targets businesses that may otherwise lack the capital to invest in digital upgrades. Both Thai-owned and foreign-owned SMEs that meet the criteria are eligible.

Juristic partnerships and limited companies are covered under the scheme, provided they are in good standing with the Department of Business Development and compliant with existing tax and financial reporting obligations.

Note: Businesses must be able to demonstrate that their claimed expenses directly support digital transformation goals. Proper invoicing, proof of payment, and vendor registration with the Digital Economy Promotion Agency (DEPA) will be essential for audit and compliance purposes.

What Expenses Qualify?

The tax deduction is available only for specific digital-related expenditures. The purpose of the deduction is to encourage SMEs to adopt technologies that improve business efficiency, digital capacity, and data management.

A 200% deduction is available that allows companies to deduct double the value of the actual expense when calculating their taxable income. However, the total benefit is capped at ฿300,000 per entity over the life of the incentive period (from 24 June 2025 to 31 December 2027).

Qualifying expenses include the purchase, rental, or subscription of the following:

• Registered digital software (e.g. cloud-based ERP, accounting systems, CRM platforms)
  
• Smart devices and digital hardware, excluding general-purpose computers (e.g. barcode scanners, POS systems, IoT-enabled machinery)
  
• Digital services that directly enhance business processes (e.g. e-commerce platforms, AI-enabled analytics, cybersecurity services)
  
• Computer programs officially registered with DEPA
  

To qualify for the deduction, these products and services must be registered and approved by DEPA. This ensures consistency in quality and limits abuse of the incentive by preventing the inclusion of general IT or consumer electronics.

Read Also: THAILAND SME POLICY UPDATES – Complete Guide for Foreign Investors in 2026

Oversight and Implementation

To ensure effective implementation, the Ministry of Digital Economy and Society has been appointed as the supervisory authority under the Decree. By appointing the Ministry of Digital Economy and Society, the government aims to ensure that companies do not take advantage of the incentive, while at the same time promoting digital capability among SMEs.

The key responsibilities of the Ministry of Digital Economy and Society include:

• Educating the public on the scope and procedures of the incentive
  
• Monitoring uptake and effectiveness, including tracking the number of SMEs utilising the scheme and the types of digital investments made
  
• Annual reporting to the Ministry of Finance, including a fiscal impact analysis measuring actual revenue foregone against projected economic benefits

It is expected that the Ministry will collaborate with DEPA to publish clear registration procedures and updated lists of qualifying technologies, ensuring that compliance remains practical and transparent.

How does this Affect Business Owners?

For eligible SMEs, this is a significant opportunity. The easier access to digital tools can help reduce inefficiencies, enhance decision-making, and enable data-driven growth. The double deduction lowers the cost of digital adoption, helping small businesses stay competitive in an environment where the technology is constantly changing and evolving.

To make sure businesses make the most of this deduction they should review their current operations to identify areas where digital upgrades, such as CRM systems, inventory management software, or e-commerce platforms, could be updated or introduced.

How can SMEs Claim the Tax Deductions?

To successfully claim the deduction, SMEs will need to ensure the following steps are followed:

1. Confirm eligibility based on their capital and revenue thresholds
2. Make purchases from registered vendors whose products or services have been approved by DEPA
3. Retain documentation including:
   
   • Official tax invoices
   • Proof of payment
   • Registration or approval confirmation from DEPA
     
4. File claims as part of their annual tax return.

Failure to comply with the registration requirements or Revenue Department standards may lead to the deduction being rejected or possible penalties such as fines. 

Businesses are advised to consult with tax professionals or legal advisors to ensure eligibility and compliance.

Our Thoughts

This new Tax incentive is a significant step to help Thai SMEs catch up with digital trends and stay competitive, especially for smaller businesses that may have delayed tech upgrades due to cost. It’s a practical way to reduce risk, cut expenses, and build a more future proof business.

Please note that this article is for information purposes only and does not constitute legal advice

Thailand has emerged as a prominent player in the global automotive industry, ranking among the top 10 countries in terms of automotive production and exports (source). In recent years, the Thai government has made a concerted effort to position the country as a regional hub for electric vehicle (EV) manufacturing. To achieve this goal, the Board of Investment (BOI) has implemented a comprehensive set of incentives and policies to encourage investment in the production of battery electric vehicles (BEVs) and their key components.

Key Points

• Thailand aims to have electric vehicles, including battery electric vehicles (BEVs), account for at least 30% of the country’s total vehicle production by 2030.
• The Board of Investment (BOI) offers attractive incentives for BEV manufacturing projects, including corporate income tax exemptions, import duty exemptions, and non-tax benefits like land ownership and foreign expert employment.
• The BOI incentives are structured based on the total investment capital, with more generous benefits for projects with an investment of at least THB 5 billion.
• Additional subsidies and tax reductions have been introduced for domestically produced BEVs, including passenger cars, pickup trucks, and motorcycles, to promote local manufacturing and offset imports.
• The BOI also provides incentives for the production of electric vehicle batteries, charging stations, and other key EV components to support the development of a domestic EV supply chain.

What is Thailand’s Current Position on EVs?

The Thai government’s commitment to transitioning towards a greener economy is highlighted through its National Electric Vehicle Policy. The National Electric Vehicle Policy aims to have electric vehicles, including BEVs, account for at least 30% of the country’s total vehicle production by 2030. To help Thailand meet this ambitious target, the BOI has introduced a series of attractive incentives and initiatives that cater to both the supply and demand sides of the EV ecosystem.

What Incentives Do the BOI Offer for BEV Manufacture?

The BOI’s incentives for Electric Batteries manufacturing in Thailand are designed to provide a wide range of benefits that address various aspects of the investment landscape. The BOI incentives are designed to encourage companies to establish or expand their BEV production operations in Thailand, while also encouraging the development of a strong domestic supply chain.

What Incentive Packages are Available from the BOI?

The BOI offers two distinct incentive packages based on the total investment capital (excluding land costs and working capital) of the Electric Batteries manufacturing project:

Projects with Total Investment Capital of at Least THB 5 Billion

1. 8-year corporate income tax (CIT) exemption, capped at 100% of the total investment capital (excluding land costs and working capital)
2. Import duties exemption on machinery
3. 1-year import duties exemption on raw materials and essential materials for products manufactured for export
4. Non-tax incentives, such as permission to own land, bring in skilled workers and experts, and remit funds abroad in foreign currency

Projects with Total Investment Capital Below THB 5 Billion

1. 3-year CIT exemption, capped at 100% of the total investment capital (excluding land costs and working capital)
2. Additional 1-year CIT exemption per key part (excluding batteries) manufactured within 3 years of starting BEV/BEV platform production
3. Additional 1-year CIT exemption if the actual production of BEV and/or BEV platforms exceeds 10,000 units per year within 3 years of commencing production
4. Import duties exemption on machinery
5. 1-year import duties exemption on raw materials and essential materials for products manufactured for export
6. Non-tax incentives, such as permission to own land, bring in skilled workers and experts, and remit funds abroad in foreign currency

It’s important to note that Electric Batteries manufacturing projects are also eligible for additional CIT exemptions under the BOI’s merit-based incentives, further enhancing the attractiveness of investing in this sector.

What is the Second Phase of Support Measures for BEVs?

On the 19th of December 2023, Thailand’s Cabinet approved the resolution of the National Electric Vehicle Policy Committee Meeting No. 1/2023 . The aim of this resolution was to introduce new incentives for the second phase of electric vehicles promotion for battery electric vehicles (“BEV”). 

Government Subsidies

The BOI will offer a new set of subsidies that will be available to projects whose business activities consist of developing passenger cars (seating capacity not exceeding 10 persons), pickup trucks, and motorcycles (“EV 3.5”). The following incentives and subsidies will be available from 1st January 2024 to 31st December 2027.

*SRP = Suggested Retail Price

Import Duty Reduction for Completely Built-Up (“CBU”) Passenger Cars

As per the Ministry of Finance Notification re: Duty Reduction and Exemption of the Completely Built-Up Battery EV dated 28^th December 2023 (“MF Notification”), importers of CBU passenger cars (with an SRP not exceeding THB2 million per unit) and comply with the requirement under the MF Notification will be eligible to receive a reduction on their  import duty of up to 40% from 1^st January 2024 to 31^st December 2025.

Excise Tax Reduction

The new resolution also states that BEV passenger cars with an SRP not exceeding THB 7 million per unit will be eligible for the reduction of the excise tax from 8% and 10% to 2% in 2024 – 2027.  

In relation to the BEV pickup trucks with the same criteria as listed in the table above, the excise tax applicable will be reduced from 10% to 0% in 2024 – 2025 and to 2% in 2026 and 2027.  

The applicable excise tax for the BEV motorcycles with the same criteria as those mentioned in the table above will be reduced from 5% and 10% to 1% from 2024 to 2027.

In order for companies to be able to receive these subsidies and tax incentives, eligible companies must domestically produce BEVs. This is a requirement as part of the EV3.5 program as it is a way to offset the imports at the offset ratio of 1:2 by 2026 (import one BEV, produce two BEVs), or 1:3 by 2027 (import one BEV, produce three BEVs).

What is the Eligibility Criteria for a Promotion from the BOI for BEV Manufacture?

To qualify for the BOI’s incentives, BEV manufacturing projects must meet specific criteria. These include:

1. Investing in a package that covers the manufacture of batteries (either by the applicant or a third party), the development of charging stations and battery swapping infrastructure, and the establishment of local Thai suppliers for technology training and technical assistance.
2. Ensuring that the BEVs sold in Thailand comply with the relevant standards and specifications stipulated by the BOI.
3. Commencing the manufacture of BEVs/BEV platforms, along with the production of batteries from the cell manufacturing process (e.g., module or battery pack manufacture), within 3 years of receiving the promotion certificate.
4. Manufacturing at least one of the following key parts within 3 years of starting BEV/BEV platform production: traction motor, battery management system, or driving control unit.
5. Companies who receive the incentives for the CBU passenger cars must domestically produce BEVs at the offset ratio of 1:2 by 2026 (import one BEV, produce two BEVs), or 1:3 by 2027 (import one BEV, produce three BEVs).

What are the Incentives for Battery and Parts Manufacturing?

In addition to the incentives for Electric Batteries manufacturing, the BOI has also implemented a range of benefits to support the development of the broader EV supply chain in Thailand. This includes incentives for the production of electric vehicle batteries (EVB), EV charging stations, and other key EV components.

Incentives for EVB, EV Charging Stations, and Other EV Parts

The BOI offers the following incentives for projects manufacturing batteries for EV (EVB), EV charging stations, and other EV parts:

1. EVB with Cell Production Process: CIT exemption for a minimum of 8 years
2. EVB with Module Production Process: CIT exemption for a minimum of 5 years
3. EV Charging Stations: Producers are required to obtain ISO 18000 certification within 3 years of receiving the BOI promotion certificate
4. Other EV Parts: Varying levels of CIT exemptions, depending on the specific component and its importance to the EV supply chain

These incentives aim to attract investment and foster the development of a robust domestic supply chain for the EV industry in Thailand, further strengthening the country’s position as a regional hub for EV manufacturing.

BOI-Approved Projects for EVB, EV Charging Stations, and Other EV Parts

As of June 2022, the BOI has granted promotion benefits to 16 production projects for batteries for EV, with a total investment of just THB 4.82 billion. This demonstrates the growing interest and investment in the EV parts manufacturing industry in Thailand.

The BOI’s incentives for these projects are designed to encourage the localization of EV component production, ensuring the availability of essential parts to support the growth of the Electric Batteries manufacturing ecosystem.

Companies the have Received a BOI Promotion for EVs

The BOI has been actively approving investment applications in the EV sector. Below is some examples of the current promotions and investments:

Hybrid Electric Vehicles (HEV):

Estimated investment: 30,000 Million THB across projects. 

Promoted Companies: Nissan, Mitsubishi, Toyota, Honda, GWM and MG

Plug-In Hybrid Electric Vehicles (PHEV):

Estimated investment: 9,000 Million THB across projects. 

Promoted Companies: Mercedes-Benz, BMW, Mitsubishi, BYD, Toyota, MG and GWM

Battery Electric Vehicles (BEV):

Estimated investment: 34,000 Million THB across projects. 

Promoted Companies: Mercedes-Benz, Nissan, Mitsubishi, BYD, Toyota, MG, Honda, Horizon+ and GWM

Our Thoughts

The BOI’s incentive schemes for Electric Batteries manufacturing and the broader EV supply chain are a clear indication of Thailand’s commitment to becoming a leading player in the global electric vehicle market. By offering attractive tax benefits, duty exemptions, and other non-tax incentives, the Thai government is actively encouraging both local and international investors to establish or expand their EV-related operations in the country.

As Thailand strives to achieve its ambitious goal of having EVs account for 30% of its total vehicle production by 2030, the BOI’s incentives are expected to continue evolving and expanding to further drive the nation’s transition towards a sustainable and environmentally-friendly transportation sector.

As the world increasingly prioritises sustainability and environmental consciousness, the renewable energy sector has emerged as an area of focus for the BOI. Thailand, and the BOI, has positioned itself as a regional leader in the renewable energy landscape. Through a comprehensive framework of supportive policies and incentives, the Thai government has created an industry encouraging investment and innovation to continue its development.

Key Points

• Thailand has set ambitious targets to increase the share of renewable energy in its total energy consumption through policies like the Power Development Plan (PDP) and Alternative Energy Development Plan (AEDP).
• The Thai government offers various incentives for renewable energy projects, including tax exemptions, import duty exemptions, Feed-in Tariffs (FiT) that guarantee fixed prices for renewable energy, and low-interest loans.
• The Board of Investment (BOI) provides substantial incentives, such as 8-year corporate income tax exemptions and non-tax incentives, for projects in solar, wind, biomass, biogas, and waste-to-energy sectors.
• Public-Private Partnerships (PPPs) are encouraged for renewable energy infrastructure development, leveraging government support and private sector efficiency.

Renewable Energy in Thailand

Thailand’s commitment is evident through numerous policy initiatives, such as the Power Development Plan (PDP) and the Alternative Energy Development Plan (AEDP). The establishment of these frameworks have set clear targets for Thailand’s energy mix, with renewable sources set to account for a significant portion of Thailand’s total energy consumption by 2036. These developments have led to the rapid expansion of renewable energy projects, ranging from large-scale solar farms to innovative biomass and biogas plants.

What Types of Renewable Energy Projects are there in Thailand?

Thailand’s shift in focus towards renewable energy has seen various types of projects appear at the forefront of the industry. Below is a list of the most popular types of renewable projects for companies in Thailand.

Solar Power Projects

Thailand has made significant steps relating to solar power projects, with numerous large-scale solar farms dotting the country’s landscape. The Feed-in Tariff (FiT) scheme, a key policy initiative, has played a major role in driving investment in these solar projects by offering guaranteed prices for the electricity generated, ensuring their long-term financial viability.

Wind Energy Developments

Leveraging its strategic geographical location, Thailand has also invested heavily in wind energy facilities, particularly in regions with favourable wind conditions. Again, the FiT scheme has been instrumental in promoting the growth of this sector, providing investors and operators with the financial stability needed to expand their wind energy operations.

Biomass and Biogas Plants

Thailand’s renewable energy landscape has also seen the emergence of biomass and biogas plants, which harness agricultural residues and waste to generate clean energy. These innovative facilities not only contribute to the nation’s energy mix but also address waste management challenges.

Hydropower Initiatives: Harnessing the Power of Water

While hydropower is the least popular choice of renewable energy project for a company in Thailand, small-scale hydropower projects in Thailand also contribute to the country’s renewable energy portfolio. The FiT scheme has helped offset the initial costs associated with these projects, making them more attractive to investors and further driving the expansion of hydropower in the nation.

What is The Legal Framework for Renewable Energy?

Understanding the legal landscape governing renewable energy in Thailand is important for investors and companies operating or looking to invest in this sector. Two key laws, the Energy Industry Act and the Energy Conservation Promotion Act, form the basis of Thailand’s renewable energy framework, providing the necessary regulatory guidelines and incentives.

The Energy Industry Act

The Energy Industry Act establishes the Energy Regulatory Commission as an independent regulatory body, overseeing the energy industry and setting the parameters for licensing and participation. This Act aims to encourage private sector involvement and enhance competition, ultimately promoting the efficient and renewable energy resources.

The Energy Conservation Promotion Act

The Energy Conservation Promotion Act serves as the foundation for Thailand’s renewable energy legal framework, providing financial and policy support for initiatives that align with the nation’s energy conservation goals. This Act incentivizes businesses and consumers to adopt sustainable energy practices, further driving the growth of the renewable energy sector.

What are the Investment Opportunities and Incentives Available to Investors in Thailand?

The Thai government’s commitment to renewable energy is reflected in the various incentives and support mechanisms it has put in place to attract domestic and foreign investment. These initiatives have significantly reduced the financial barriers to entry, making Thailand an increasingly attractive destination for renewable energy projects.

Tax Incentives and Exemptions by the Board of Investment (BOI)

The Board of Investment (BOI) offers substantial tax breaks and exemptions to promote investment in the renewable energy sector. Eligible projects may receive corporate income tax exemptions ranging from 5 to 8 years, along with import duty exemptions on machinery. 

Additionally, non-tax incentives include 100% foreign ownership, the ability to hire foreign expatriates with reduced requirements when compared to other types of company, the ability to own land and remit funds abroad from Thailand.

It is important to note that the production of electricity or steam from waste or refuse-derived fuel has been classified as an activity of special importance and benefit to Thailand. Therefore, any projects who undertake activities within this field will be granted 8-year corporate income tax exemptions. This exemption will not be subject to a corporate income tax exemption cap. Such projects will also be eligible for the exemptions of import duty on machinery and other non-tax incentives.

Furthermore, projects that: 

1. manufacture of solar cells and/or, 
2. Manufacture raw materials for solar cells, 
3. produce electricity and steam from renewable energy sources, e.g. solar energy, wind energy, biomass or biogas

Will be granted the following incentives:

• an 8-year corporate income tax holiday, 
• exemptions of import duty on machinery as well as non-tax incentives. 

Projects that manufacture fuel from agricultural products or agricultural scrap or garbage or waste, e.g. biomass to liquid (BTL) or biogas from wastewater, as well as the traditional non-tax incentives will also granted: 

• an 8-year corporate income tax holiday, 
• exemptions of import duty on machinery and import duty on raw or essential materials used in manufacturing export products, 

Finally, projects that manufacture biomass briquettes and pellets will be granted a 5-year corporate income tax holiday, exemptions of import duty on machinery as well as the traditional non-tax incentives.

Feed-in Tariffs (FiT) for Renewable Energy

The FiT scheme is a key aspect of Thailand’s renewable energy policy, guaranteeing fixed prices for energy generated from renewable sources. This policy reduces the financial risk associated with renewable energy projects, making them more appealing to potential investors.

Feed-in TariffF rate (FiTF) is a fixed buying rate for electricity produced by renewable sources. The rate is calculated from initial investment for the power plant construction and the full lifetime use] of its operation and maintenance cost. Furthermore, the scheme will also compensate investors for any price inflation for raw material used in biological energy production (for waste, biomass and biogas).

FiT is available to various types of renewable energy sources such as local solar farms, water & wind availability and biological feedstock for energy production

Public-Private Partnerships (PPPs)

Thailand actively encourages Public-Private Partnerships (PPPs) in renewable energy projects, offering a collaborative approach to infrastructure development. These partnerships leverage government support and private sector efficiency, creating synergies that benefit both parties and contribute to the sector’s growth.

Low-Interest Loans: Facilitating Project Financing

Financial institutions in Thailand, in collaboration with governmental policies, have been known to offer soft loans or loans with lower-than-market interest rates for certain renewable energy projects, further enhancing the financial viability of these investments.

What Opportunities are Available to Investors in the Renewable Energy Sector?

Thailand’s journey towards sustainable energy presents investors and companies with a unique opportunity to capitalise on the growing potential of this sector.

Driving Innovation and Technological Advancements

The renewable energy landscape in Thailand offers many opportunities for innovation and the integration of cutting-edge technologies. Investments in emerging solutions, such as energy storage systems, smart grid infrastructure, and advanced renewable energy technologies, can position companies at the forefront of the industry’s evolution.

Collaboration and Knowledge Sharing

Strengthening collaborative efforts between the public and private sectors, as well as facilitating knowledge sharing among industry players, can further boost Thailand’s renewable energy sector. Such synergies can lead to the development of more efficient, cost-effective, and sustainable energy solutions, benefiting the nation as a whole.

Our Thoughts

Thailand’s renewable energy landscape presents a compelling opportunity for investors and companies seeking to contribute to a more sustainable future. The comprehensive framework of supportive policies, incentives, and legal structures has created many opportunities for growth and expansion of renewable energy projects.