G/SCM/Q2/THA/25  
 
13 June 2013  
(14-3383)  Page: 1/4  
Committee on Subsidies and Countervailing Measures  Original: English  
 
 SUBSIDIES 
REPLIES TO QUESTIONS POSED BY THE UNITED STATES REGARDING 
THE NEW AND FULL NOTIFICATION OF THAILAND1 
The following communication, dated 10 June 2014, is being circulated at the request of the 
delegation of Thailand.  
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  Question 
 
N/200, Page 3, Program I, Investment Promotion Incentives  
Could Thailand please submit notification wi th sufficient detail with regard to the BOI 
policy to promote passenger car and motorcyc le production as identified in THA/23? 
 
Reply 
 
The BOI list of eligible activities for investment promotion can be amended for update in consistency with economic development. In 2007, BOI added assembling of passenger car and 
large-sized motorcycle to the eligible list of activities entitled to investment promotion to promote 
investment and create competence in the two-se ctors, thus creating business for the existing 
automotive industry by offering tax incentives as listed in G/SCM/N/220/THA-G/SCM/N/253/THA 
including exemption of corporate income tax, import duty on machinery and raw materials. 
 Question 
 
Could Thailand submit notification with  sufficient detail regarding a BOI policy 
announced in November 2009 in connection wi th its "One Start One Stop" initiative 
under which, according to TPR/255 at page 77,  enterprises qualify for tax incentives on 
investments with value-added of at least 20% of sales revenue? Does the value-added 
requirement equate to certain levels  of local content in production? 
 
Reply 
 
The One Start One Stop Service Centre and the criteria for investment promotion approval 
regarding the value-added of at least 20% of sales revenue are two separate issues and are not 
tied to one another. The project approval criteria should have been under a separate paragraph of TPR/255 page 77 as paragraph 112. The One Start One Stop Service Centre is a facility to make the process of opening a business easier and to provide a central source of information regarding 
business operations by encompassing representative from 20 government agencies under one 
roof.   
The value added consideration does not encourage the use of domestic goods over imported goods 
since both imported and local raw materials are equally taken into account.  
                                               
1 G/SCM/N/220/THA-G/SCM/N/253/THA. G/SCM/Q2/THA/25 
 
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  Question 
 Could Thailand submit notification with sufficient detail as to another BOI policy 
announced in April 2010 under which accordin g to TPR/255 at page 78, investment in 
certain sectors – e.g. biof uels, biotechnology, high technology and agricultural 
equipment – is encouraged with tax-based incentives?  
Reply 
 
In 2010, BOI introduces investment promotion for sustainable development policy to promote investment in knowledge-based industries, to encourage projects to conserve energy and utilize 
alternative energy, to promote production efficien cy through technology upgrade and to encourage 
environmental conservation. The policy introduc es 4 measures and tax incentives as follow: 
 
1.  Measures to promote investment in industries related to energy conservation and alternative 
energy, industries related to eco-friendly materi als and products and high-technology businesses, 
in which tax incentives are equivalent to Zone 3 under the investment promotion incentive 
program notified in Thailand's new and full notification of subsidies 
(G/SCM/N/220/THA-G/SCM/N/253/THA)  2.  Measure to promote energy conservation, alternative energy utilization or reduction of 
environmental impacts, the applicant must submit investment plan for machinery change to save 
energy, introduce use of alternative energy into th e project, or to reduce environmental effects in 
which tax incentives shall include exemption of import duty for machinery, and corporate income 
tax exemption. 
 3.  Measure to promote production efficien cy improvement by technology upgrade for 
manufacturing of new products, the applicant must invest in upgrading the existing production line 
to be able to manufacture new product in which tax incentives shall include exemption of import duty on machinery and corporate income tax.  
4.  Measure to solve environmental problems, in which applicants must comply with the 
environmental management criteria and conditions specified by the government with pollutant values less than the legal control rate and must be in oil refinery, natural gas separation, power 
generation, chemicals and petrochemicals and mineral and base metals, in which tax incentives 
shall include exemption from import duty on machinery used for reduction of environmental impact, and corporate income tax exemption. 
 
Question  Further, could Thailand also submit notifi cation with sufficient detail regarding 
incentives provided under the Skill, Te chnology and Innovation (STI) Scheme, 
mentioned at page 79 of TPR/255 as an other BOI initiative per Announcements 
No. 3/2549, 6/2552 and 11/2552 
 
Reply 
 
In 2006, BOI introduces investment on developing skill, technology and innovation policy to 
encourage the industrial sector to invest in the development of Skill, Technology and Innovation – STI, which was then amended in 2009 whereby existi ng promoted activities entitled to additional 
exemption of corporate income tax. 
 
Question  
N220, Page 5, Program II, Industri al Estate Authority of Thailand 
 Could Thailand provide information with su fficient detail regarding the tax and duty 
exemptions for locally produced raw material s and components in light of the obligation 
under Article 3.1 (b) of the SCM Agreement? 
 G/SCM/Q2/THA/25 
 
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  Reply 
 
The I-EA-T Act B.E. 2007 has no export conditions and local produced imposed in accordance with WTO obligations. In accordance with I-EA-T Act B.E. 2007, Section 52/1, in case where materials, 
including products, by-products and other things arising from manufacture, which carried out of 
I-EA-T Free Zone shall be imposed with taxes or duties and where domestic raw materials are brought into free zone to manufacture, mix, assemble, or pack or to do anything with those 
materials whereby those domestic raw materials are unable to refund for, or are not exempted 
from duties, the price of those domestic raw material shall not be taken into the calculation of taxes or duties in accordance with the rules, procedure and conditions as determined by the Director-General of the Customs Department.  
 
Question  
Please clarify whether the free zones prog ram mentioned in TPR/255 at page 73 is 
different from the I-EA-T Free Zones program under I-EA-T Act B.E. 2007.  
Reply 
 
According to the Section 48 of I-EA-T Act (No.4)  B.E. 2550 [2007], materials brought into free 
zone (I-EA-T Free Zone) shall be imposed with duties equal to duties to be imposed with materials 
imported into custom free zone under the custom law , and they shall be entitled to the following: 
exempted surcharge under the law on promotion of investment, import duty, value added tax, 
excise tax, imported machines, accessories, equipments and tools as well as their components. 
 
Question  
Could Thailand please submit a complete no tification regarding all of its free zones 
incentives, with sufficient detail to satisfy the requirements of Article 25.3 of the SCM 
Agreement or explain why they are not su bject to the notification obligation?  
 
Reply 
 
The I-EAT provides tax incentives for industrial operators in the I-EA-T Free Zone, which is no 
specific granted budget for purpose of a subsidy. Under the Industrial Estate Authority of Thailand 
Act (No.4) B.E. 2550 [2007], Free Zone incentives are entitled as follows; 
 
 Section 48 : Materials brought into free zone shall be imposed with duties equal to duties to 
be imposed with materials imported into cust om free zone under the custom law, and they 
shall be entitled to the following interests, 
(1)  as for materials imported into the Kingdom and then brought into free zone; they shall be 
exempted from surcharge under the law on promot ion of investment, import duty, value added tax 
and excise tax if they are machines, accessories, equipments and tools as well as their components which are necessary for the manufacture  of goods or for commerce, as the case may 
be, including any material to be used for the construction, assembly or installation of factory or 
building within free zone. In this regard, those materials shall be imported into the Kingdom and brought into free zone under approval of the Boar d in compliance with the rules, procedure and 
conditions as determined by the Board; 
 (2)  as for materials imported into the Kingdom and then brought into free zone in order to manufacture goods or for commerce; they shall be exempted from surcharge under the law on 
promotion of investment, import duty, value adde d tax and excise tax in accordance with the 
rules, procedure and conditions as determined by the Governor;  
(3)  if materials imported into the Kingdom and then brought into free zone under (2) and 
products, by-products and any other things arisin g from the manufacture within free zone have 
been exported, they shall be exempted from surc harge under the law on promotion of investment, 
import duty, value added tax and excise tax. Materials brought into free zone under paragraph one 
shall include materials taken from one free zone to another.   G/SCM/Q2/THA/25 
 
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   Section 49 . Materials imported into the Kingdom, or domestic raw materials brought into 
free zone, for manufacturing, mixing, assembling, packing or any other act for the purpose of exportation shall not be subjected to the law in relation to the control of importation into the Kingdom, exportation abroad, or possession or utilisation of those materials or to the 
control of standard or quality of, or seal affixing or marking to, those materials other than 
the custom law in accordance with the rules, procedure and conditions as determined by the Board.  
If materials under paragraph one are or may be detrimental to National security or safety, public 
order, public health or environment or being ma terials under arrangement or agreement to which 
Thailand is bound in relation to an importation into the Kingdom, an exportation from the Kingdom or possession or utilisation thereof, the Minister shall have the power to issue the Ministerial 
Regulation determining types or categories of those materials which are not enjoy the exemption 
under paragraph one. In this case, related rules, procedure and conditions may be prescribed therein. 
 
 Section 52 . In the case where materials imported into the Kingdom and brought into free 
zone under section 48 or section 49 and materials under section 51, including their 
products, by-products and any other things arising from the manufacture within free zone, 
are taken out of free zone for use or sale within the Kingdom, they shall be imposed with surcharge under the law on promotion of investment, import duty, value added tax and excise tax calculated upon the basis of their conditions and prices and at the rate on the 
date they are taken out of free zone. In this case, the provisions of law in relation to the 
control of importation into the Kingdom, exportation abroad, or possession or utilisation of those materials or to the control of standard or quality of, or seal affixing or marking to, 
those materials shall apply to those materials as  from the date they are taken out of free 
zone, as the case may be, as if they are imported into the Kingdom on the date they are taken out of free zone. 
 Section 52/1 . In the case where materials, including products, by-products and other 
things arising from the manufacture, which are taken out of free zone shall be imposed with taxes or duties and where domestic raw materials are brought into free zone to manufacture, mix, assemble, or pack or to do  anything with those materials whereby those 
domestic raw materials are unable to refund for, or are not exempted from, duties, the price 
of those domestic raw material shall not be taken into the calculation of taxes or duties in accordance with the rules, procedure and conditions as determined by the Director-General 
of the Customs Department. 
 
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