Guidelines on the conditions for applying for BOI investment incentives for developing software, a digital platform, or content

Keywords: Mazars, Thailand, Legal, Guidelines, BOI, Digital, Investment

Definitions of key terms in the Notification

Software	A computer program, application, system, or set of instructions written in computer language to order a computer or electronic device to work as assigned.
Digital platform	A system, channel, or procedure for providing digital services in exchanging information, goods, or services between a developer and user over the internet or other electronic networks.
Digital content	Motion pictures generated by computers, such as games, animation, technology, augmented reality (AR) and virtual reality (VR).

Key qualifications

The Notification sets out the requirements for an applicant to be eligible to apply for investment incentives for developing software, a digital platform, or digital content, as follows:

Qualifications	Details
Development process in Thailand	a. Must be a new development of software, a digital platform, or digital content. b. If a product has been developed before applying for investment incentives, after applying for investment incentives, the product must include new functions that differentiate it from the original product. c. The applicant must provide documentation of development of the software, digital platform, or digital content, which must contain at least the following information: i. Background and business opportunity; ii. Where the product was developed before applying for investment incentives, the details of the functions of the software, digital platform, or digital content must be provided; iii. Details of functions of the software, digital platform, or digital content that will be developed after applying for investment incentives; iv. The technology used in development; v. A development plan and timeline for the software, digital platform, or digital content; vi. The customers, distribution channels, and business model; and vii. Details of the management and information technology teams. The following types of software, platforms, and/or digital activities are not eligible for investment incentives: Website development which is not for a web application Advisory services Selling goods or services through a platform, i.e., wholesale and retail, transportation, issuing credit terms, etc. Improving software or a platform which does not result in developing new functions, i.e., a user Interface, the conversion or addition of other languages to software or a platform, etc. Procuring, installing, customizing, or maintaining hardware or software from other service providers Providing data analysis services without developing tools for analysing data Providing software testing services without the applicant using its own development tools Creating computer graphics or visual effects for movies, dramas, advertisements, or documentaries (visual technology) Video editing Audio editing to create sound effects Digital painting, i.e., webtoons, stickers, etc. Providing services relating to cryptocurrency which is not platform development, i.e., an initial coin offering, etc. Developing software or a platform to provide digital services or digital content for use within an organization Other procedures which do not involve developing new products or new functions. The BOI will consider such applications on a case-by-case basis.
Minimum capital requirement for a project	The minimum capital is THB 1.5 million a year. This is based on the salary expenses for Thai IT staff members hired after the date on which the application is filed. Thai IT staff members are those who are responsible for the following: Developing the software, digital platform, or digital content, such as developers, programmers, software engineers, etc. Developing digital art, such as animators, 2D artists, game designers, etc. Such staff members must be hired as full-time employees and be listed in tax filings PND 1 and PND 1 Kor.
Machinery and equipment	Hardware and software which is directly used in developing the software, digital platform, and / or digital content.

Exemption from corporate income tax

The cap on the exemption from corporate income tax (“CIT”) is based on the salary expenses and training expenses for Thai IT staff members, as well as expenses for obtaining quality and standard certificates, subject to the following conditions:

Expenses	Details
Salary expenses	100% exemption from CIT for expenses incurred for IT staff members newly employed after applying for investment incentives.
Training expenses	100% exemption from CIT for training expenses incurred. This training must be related to IT, or the development of software, a digital platform, and/or digital content. The following expenses will be exempt from CIT: - Training provided by an external party / online courses: curriculum costs, instructional media costs, travel costs, and examination fees for obtaining a certificate. - Training under a co-training programme through a university; costs for arranging training, including instructional media costs, travel costs, costs for hiring a lecturer, costs for hiring a consultant for arranging training, and examination fees for obtaining a certificate.
Expenses for obtaining quality and standard certificates	100% exemption from CIT for expenses incurred. These expenses must be incurred to obtain an ISO 29110 or CMMI (Level 2 or higher) certificate or other equivalent certificates for the first time.

Types of revenue that are qualified for exemption from CIT

Only revenue arising from selling or providing services directly related to the development of software, a digital platform, or digital content for a project / activities for which the investment incentives are received is entitled to the exemption from CIT. This includes the following:

1. Developing, installing, testing, improving, or maintaining the software, digital platform, or digital content developed in the project;

2. Selling the software, digital platform, or digital content developed in the project;

3. Licence fees for using the software, digital platform, or digital content developed in the project;

4. Subscription fees for using the software, digital platform or digital content developed in the project;

5. Payments for each use of the software, digital platform, or digital content developed in the project;

6. The sale of additional features or functions in the application (in-app purchases) that are developed in the project;

7. Usage fees from a platform providing digital services that is developed in the project, such as revenue from using the platform for testing software and data analysis, etc.;

8. Revenue sharing from the development of or a subscription to the software or digital content under an agreement; and

9. Fees for advertising displayed in the software, digital platform, or digital content developed in the project.

Sources:

BOI Notification No. Por. 12/2566: https://www.boi.go.th/upload/content/por12_2566_651d22790df08.pdf

Investment Incentives Guide 2023: https://www.boi.go.th/upload/section4_en_wt_link.pdf