National Innovation Agency Encourages Innovative Business Investments in Thailand through Tax Exemptions

3 mins read

5 July 2023

Discover how the National Innovation Agency (NIA) of Thailand is fueling innovative business investments by offering tax exemptions to startups.

The National Innovation Agency (NIA) of Thailand is taking proactive steps to stimulate innovative business investments within the country. In a recent development, the NIA has introduced a new channel to endorse innovative startups seeking corporate income tax exemptions. Interested parties can now submit their documents and apply for endorsement consideration through the official NIA website.

The NIA aims to certify a minimum of 20-30 startups in 2023, focusing primarily on enterprises operating in the innovation and deep tech sectors. Dr. Pun-Arj Chairatana, the Executive Director of the NIA, emphasized the significance of Thailand’s aspiration to become an “Innovation Nation” by attracting foreign nationals interested in living and conducting business in the country. Thailand offers competitive business operating costs, a moderate cost of living, and various economic growth initiatives. One notable initiative is the exemption of capital gains tax for Thai and foreign investors in targeted industries, thereby motivating and attracting highly-skilled individuals to work or invest in Thailand.

Dr. Pun-Arj further explained that the capital gains tax exemption measure is a result of collaborative efforts between the Revenue Department, the Digital Economy and Society Council of Thailand, the NIA, and partner agencies. The objective is to provide support to Thai and foreign startups operating in specific industries and certified by the NIA, the National Science and Technology Development Agency (NSTDA), or the Digital Economy Promotion Agency (depa).

These efforts have yielded increased funding from investors, consequently promoting economic growth within the country. It is estimated that by 2025, the tax measure will lead to a substantial investment of at least 300 billion baht in Thai startups and create around 500,000 jobs directly and indirectly.

Dr. Pun-Arj highlighted that the NIA is an additional agency that can certify startups for corporate income tax exemptions. To be eligible for these benefits, investors must contribute to businesses that integrate technology into their production or service processes, generating a minimum of 80% of their revenue.

Investors who directly invest in Thai startups will be exempted from capital gains tax on profits from stock transfers. This exemption applies to both individuals and corporate investors. Similarly, if the investment is made through a company participating in joint investment with a firm utilizing Corporate Venture Capital (CVC) or holding units in a Private Equity (PE) Trust, the same tax exemptions will apply.

In the year 2023, the NIA expects a significant number of startups, particularly those in the innovation and deep tech sectors such as AI, robotics, virtual reality, and the ARITECH group in the medical innovation sector, to submit applications for endorsement and capital gains tax exemption. The NIA is currently actively seeking investment promotions from the Board of Investment (BOI) under the Yothi Medical Innovation District.

Dr. Pun-Arj expressed the NIA’s anticipation that deep technology startups will be at the forefront of applying for startup endorsements, as this sector attracts global investor attention and exhibits high growth potential. While Thailand currently has a limited number of deep tech startups, there are ample opportunities for companies and investors to engage in business activities. In addition to capital gains tax exemptions, the NIA has initiated projects that facilitate and incentivize highly-skilled individuals and foreign investors to work or invest in Thailand’s target industries, such as the SMART Visa project. This project, a collaboration between the NIA and BOI, aims to streamline business processes for investors and entrepreneurs.

Furthermore, the NIA is establishing a “Global Startup Hub” as a world-class center that offers aid and convenience to Thai and foreign entrepreneurs and startups through a comprehensive “One-Stop Service” approach. This initiative includes fostering technological innovation partnerships through innovation diplomacy.

Thailand’s National Innovation Agency remains committed to fostering an environment conducive to innovation and entrepreneurship. With its forward-thinking strategies and supportive policies, the NIA aims to position Thailand as a premier destination for innovative startups and drive sustainable economic growth in the years to come.

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