The International Business Center (IBC) regime
The International Business Center (IBC) regime in Thailand is a special regime designed for large businesses. It aims to strengthen Thailand’s role as a regional hub for international corporations. Thailand offers multinational companies the opportunity to establish their regional headquarters in the country, providing them with attractive tax and non-tax incentives.
Conditions for Obtaining IBC Status
1. The company must be registered in accordance with Thai legislation and provide one or more of the services listed below.
2. The paid-up capital must be at least 10 million baht at the end of each reporting period.
3. The company must have at least 10 qualified employees, or at least 5 if it only operates as a treasury center.
Types of Activities for IBC
An IBC must provide associated companies with at least one of the following services:
1. General management, business planning, and business cooperation.
2. Procurement of raw materials and components.
3. Research and development of products.
4. Technical support.
5. Marketing and sales promotion.
6. Personnel management and training.
7. Financial consulting services.
8. Economic and investment analysis and research.
9. Credit management and control.
10. Treasury center services.
11. International trade.
12. Lending to associated enterprises outside the treasury center in accordance with foreign exchange control legislation, such as:
- Providing loans in foreign currency to associated enterprises abroad
- Providing loans in Thai baht to associated enterprises in Thailand
- Providing loans in Thai baht to associated enterprises in Vietnam and countries bordering Thailand. These loans must be used exclusively for trade and investment in Thailand or the specified countries.
13. Services for leasing office- or production buildings to associated enterprises.
14. Other auxiliary services approved by the Thailand Board of Investment.
When engaging in international trade activities and providing services for leasing office- or production buildings to associated companies, at least one service listed in items 1-10 must be provided.
When providing loans to associated enterprises, at least one service listed in items 1-9 must be provided.
Tax Incentives
Companies meeting the IBC criteria, with annual operating expenses of at least 60 million baht, can enjoy a range of benefits and advantages for a standard term of 15 years, including:
Reduced corporate income tax rates on relevant income:
– 3% provided that IBC incurs expenses in Thailand of at least 600 million baht per year.
– 5% for expenses in Thailand of at least 300 million baht.
– 8% for expenses in Thailand of at least 60 million baht.
– Exemption from tax on dividends received from subsidiaries.
– Exemption from withholding tax on dividend payments to foreign shareholders.
– Exemption from withholding tax on interest payments to foreign shareholders related to treasury operations.
– Exemption from tax on certain types of business income of the treasury center.
– Flat personal income tax rate of 15% for foreign employees.
To receive these tax benefits, the company must apply to the Revenue Department.
Non-Tax Incentives
– Permission for 100% foreign ownership of IBC.
– Visa and work permit privileges for foreign nationals working in IBC.
– Permission to acquire land for business purposes of IBC.
– Exemption from import duties on equipment used for R&D or training.
Foreign employees of IBC may be eligible for an LTR visa.
If you have questions about IBC in Thailand, please email me, or use the form below.