G/SCM/Q2/THA/27  
 
17 May 2016  
(16-2704)  Page: 1/6  
Committee on Subsidies and Countervailing Measures  Original: English  
 
 SUBSIDIES 
REPLIES TO QUESTIONS1 POSED BY THE UNITED STATES REGARDING 
THE NEW AND FULL NOTIFICATION OF THAILAND2 
The following communication, dated 13 May 2016, is  being circulated at the request of the 
Delegation of Thailand.  
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  Program covered in the notification 
Investment Promotion Incentives 
The United States appreciates Thailand's re sponses to the previous questions of the 
United States regarding Thailand's prior no tification the Board of Investments (BOI) 
incentives pursuant to Investment Promotion Act (1977) (Amended 1991, 2001)  
(IPA).
3,4 We remain concerned howe ver, that the prior notification may not reflect the 
breadth of programs within the IPA framewor k, in light of the BOI's discretion in 
determining what projects or sectors to promote. 
In Thailand's previous answers, a number of  BOI-related programs were identified, as 
described below. With regard to each progra m, could Thailand provide information with 
sufficient detail to satisfy the notification  requirements of Article 25.3 of the SCM 
Agreement? Additionally, could Thailand ex plain if the program draws on incentives 
provided under any other law or legal measur e besides the IPA, and if so, identify the 
law or legal measure? 
1. Passenger Car and Large-Sized Motorcycle Program – In 2007, the BOI added 
passenger car and large-sized motorcycle  assembly to the list of investment 
activities eligible for IPA incentives.  
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 create 
competency in the two sectors, 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. 
2. Zone 3-Equivalent Investment Incentives for Certain Industries – Tax incentives 
equivalent to Zone 3 incentives were introduced by the BOI in 2010 for 
investments in industries related to ener gy conservation, alternative energy, eco-
friendly products and high-technology businesses. 
                                               
1 G/SCM/Q2/THA/26. 
2 G/SCM/N/284/THA (6 November 2015), Subsidies Notification. 
3 G/SCM/N/220/THA-G/SCM/N/253/THA (11 July 2013), Subsidies Notification, page 5, program II, 
I-EA-T Investment Privileges. 
4 G/SCM/Q2/THA/25 (13 June 2014), Reply to Questions Posed by the United States. G/SCM/Q2/THA/27 
 
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  3. Duty and Tax Incentives for Energy Conser vation and Alternative Energy Utilization 
– Incentives, including exemptions on im port duty for machinery and corporate 
income tax, were introduced in 2010 fo r producers who submit investment plans 
for changes in machinery to save energy, use alternative energy or reduce 
environmental effects.  
4. Duty and Tax Incentives for Technology Upgrade in New Product Manufacturing – 
Incentives, including exemptions on im port duty for machinery and corporate 
income tax, were also introduced in 2010 for producers who invest in production 
line upgrades for the manufacture of new products. 
Reply: 
 
To enhance domestic industrial growth and upgrade to a more knowledge-based industry that uses 
higher technology, by virtue of the Investment  Promotion Act of B.E. 2520, BOI has announced 
investment promotion for sustainable development whose details of the program can be found in 
attachment 1. 
 Attachment 1 
 
INVESTMENT PROMOTION INCENTIVES  1. Title of the subsidy program 
 Investment Promotion for Sustainable Development  
2. Period covered by the notification 
 
1 January 2013 – 31 December 2014 
 
3. Policy objective and/or purpose of the subsidy 
 To enhance domestic industrial growth and upgrade to a more knowledge-based industry that uses 
higher technology 
   
4. Background and authority for the subsidy 
 
The legal basis of the investment promotion incentives is the Investment Promotion Act (1977) 
amended in 1991 and 2001. The responsible authorit y is the Office of the Board of Investment 
(BOI).  5. Form of the subsidy 
 Tax concessions such as exemption/reduction of corporate income tax, exemption/reduction of import duties on machinery, reduction of import duties on raw materials, and special deduction of 
certain expenditures. 
 6. To whom and how the subsidy is provided 
 1. A wide range of activities covering especially  activities related to energy conservation and 
alternative energy, activities related to eco-friendly materials and products, high-technology businesses are eligible for investment promotion incentives. The scheme is not specific to any part 
of the country. All areas throughout the country (except Bangkok) shall be designated as an 
Investment Promotional Zone for this scheme until December 31, 2013.   
The following incentives are granted: 
 
1. Exemption of import duty on machinery 
2. Exemption of corporate income tax for eight years  G/SCM/Q2/THA/27 
 
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  3. Fifty percent reduction of corporate income tax on the net profit generated from the 
investment for not more than five years from the date on which the incentive period under Section 31 ends. 
4. Double deduction for transportation, electricity and water costs for 10 years from the 
date of first income derivation from promoted activity 
5. Deduction of infrastructure installation or construction costs from net profit in addition 
to normal depreciation of not more than 25% of the investment in promoted project. 
Such deduction can be made from the net profit in one or several years during the 
period of 10 years from the date of the first income derivation from promoted project. 
 2. Measure to promote energy conservation, al ternative energy utilization or reduction of 
environmental impacts. Under this measure, incentives are given to existing projects, be it BOI or 
Non-BOI promoted companies to invest in upgrading the machinery to modern technology that reduces energy consumption or use alternative energy or reduce environmental impacts.  
 
The following incentives are granted:  
1. Exemption of import duty for machinery  
2. Three-year corporate income tax exemption on the revenue of an existing project, 
accounting for 50% of the investment under this measure and excluding the cost of land and working capital, except for environmental impact reduction which will be 
granted an eight-year corporate income tax exemption, accounting for the 50% of the 
investment under this measure, excluding the cost of land and working capital. 
3. Corporate income tax exemption period shall start from the date of revenue derivation 
after promotion certificate issuance. 
 3. Measure to promote production efficiency  improvement by technology upgrade for the 
manufacturing of new products. Under this measure, incentives are given to existing projects, be it 
BOI or Non-BOI promoted companies to invest in upgrading the existing production line to be able to manufacture new products.  
The following incentives are granted: 
 
1. Exemption of import duty on machinery regardless of zone 
2. Three-year corporate income tax exemption on revenue derived from the production 
of new products, not exceeding 50% of the investment in upgrading the production line 
 
4. Measure to solve environmental problems. Un der this measure, incentives are given to 
existing projects, be it BOI or Non-BOI promoted  companies, to comply with the environmental 
management criteria and conditions specified by the government with pollutant values less than 
the legal control rate and successfully reduce the environmental impact. 
 The following incentives are granted: 
 
1. Exemption from import duty on machinery used for machinery improvement to reduce 
the environmental impact. 
2. Eight-year corporate income tax exemption on the revenue of an existing project, 
accounting for 50% of the investment in machinery improvement, excluding the cost of land and working capital. 
3. The corporate tax exemption period will start from the date of income derivation after 
promotion certificate issuance. 
 7. Amount of the subsidy 
 There is no specific budget earmarked for investment promotion incentives. The information on the subsidy per unit therefore cannot be provided. No statistics on corporate income tax exemption 
and reduction are available. 
 G/SCM/Q2/THA/27 
 
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  8. Duration of the subsidy and/or any time attached to it 
 
Applicants must submit the application by December 31, 2013 and complete the implementation within three years from the date of promotion certificate issuance. However, the incentives 
granted to each investment are subject to certain time limits. 
 5. Incentives under the Skill, Technology and Innovation (STI) Scheme – Introduced 
in 2006 and amended in 2009, this program promotes the development of skill, 
technology and innovation in existing prom oted activities by providing additional 
corporate income tax exemptions. 
Industrial Estate Authority of Thailand (I-EA-T) 
We note that previously Thailand stated th at the local content requirements of this 
program were eliminated as of 1 August 2000.5 However, according to the Secretariat's 
Report for the latest Trade Polic y Review of Thailand (TPR/326)6, pursuant to the 2007 
I-EA-T Act , "raw materials and components are entitled to tax and duty exemptions if 
they are produced locally".7  
 Could Thailand clarify whether local cont ent continues to be a requirement for 
the tax and duty exemptions under this program and if so, discuss this 
requirement in the context of Article 3.1(b) of the Subsidies Agreement? 
Reply: 
 
According to Industrial Estate Authority of Thaila nd Act, B.E. 2522 (1979), as last amended by the 
Industrial Estate Authority of Thailand Act (No.4), B.E. 2550 (2007), Section 52/1 provides that "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."  
Programs not covered in the notification  
Information contained in Thailand's Trade Policy Review indicates a number of other 
programs potentially subject to notification  obligations. Accordingly, for each of the 
programs described below, the United Stat es respectfully requests that Thailand 
consider notifying the program or explai n why the notification requirements of 
Article 25 do not apply. Additi onally, please respond to the specific questions regarding 
each program where indicated below. 
1. Tax Coupons on Exported Goods – Under the Tax and Duty Compensation of 
Exported Goods Produced in the Kingdom Act B.E. 2524 (1981) , "exported goods 
manufactured in Thailand continue to be eligible for tax coupons, which may be 
used to pay taxes and duties".8 Could Thailand explain how this program is 
consistent with obligations under Articl e 3.1(a) of the Subsidies Agreement? 
2. Income Tax Deduction for R&D Expenses – Thailand's corporate income tax 
measures include "a number of exceptiona l allowances … applied in calculating 
taxable profit, including a 200% tax deduct ion of expenses on R&D, job training 
…"9  
                                               
5 G/SCM/N/220/THA-G/SCM/N/253/THA, page 5, program II, I-EA-T Investment Privileges. 
6 WT/TPR/S/326 (20 October 2015), Trade Policy Review Report by the Secretariat: Thailand 
("TPR/326"). 
7 TPR/326, page 67, paragraph 3.94. 
8 TPR/326, page 67, paragraph 3.93. 
9 TPR/326, page 72, paragraphs 3.110. G/SCM/Q2/THA/27 
 
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  Reply: 
 
A 200% tax deductions of expenses on R&D, job training, and special measure/equipment for disabled persons do not aim to attract any particular type of businesses but are given to business 
sector as a whole. This is in order to promote the technological advancement, human resources, 
and also assisting disabled person via private entity; therefore, these incentives are not considered a government subsidy for investors. 
3. Tax Deductions for Certain Expenditures – Tax incentives "such as 
exemption/reduction of corporate income  tax, exemption/reduction of import 
duties on machinery, reduction of import  duties on raw materials, and special 
(e.g., double) deduction of certain expe nditures …" that have not yet been 
"notified to the WTO".10  
Reply: 
 
Thailand has made the notification of its new and full investment promotion incentives for the 
period covered 2013-2014 as circulated in G/SCM/N/284/THA. Measures issued after such period will be notified to the WTO for the review period covered 2015-2016 in accordance with the 
obligations pursuant to the Article XVI:1 of the GATT 1994 and Article 25 of the Agreement on 
Subsidies and Countervailing Measures. 
4. Provision of Electricity Below Cost – Thaila nd's electricity authority, EGAT, supplies 
electric power to certain customers below cost.11 Could Thailand provide 
information as to what classes of cust omers receive below-cost electricity and 
whether these include particular  industries or producers?  
Reply: 
 
The power tariffs that was announced and collected from consumers is guided by Thailand's power tariff policy, which indicated that power tariffs must reflect production cost and must be fair to 
both power producers and consumers. Moreover, power tariffs for consumers in the same category 
must have the same level of tariff (Uniform tariff) except for the disadvantages and low-income people who will receive subsidy. For this reason, there is no subsidization and supplying electric power to customers below cost (according to Articl e 25). Therefore, the notification requirements 
of Article 25 do not apply to this program. 
 A group of consumers that receive subsidy and pay power tariff below cost is consumer 
category 1.1 Residential. Consumer with the inst allation of power meter not over 5 AMP and with 
the monthly consumption not over 50 kWh (low-income people) will be exempt from paying power tariff. This is due to Thailand's power tariff policy which created a mechanism to assist the 
disadvantages/low-income people and does not include other consumer categories (industries and 
producers). 
5. Eco-Car Scheme Tax and Duty Incentiv es – Launched in September 2013, the 
"Second Phase" of Thailand's Eco-Car sc heme provides numerous tax incentives 
(corporate tax, import duty and other tax benefits) for substantive investments 
and production, with a threshold of 100,000 cars per year.12 
Reply: 
 
Excise tax is the tax applied to domestic consumption and collected from domestically produced goods and imported goods only. The Excise Department treats domestically produced cars and 
imported cars equally by applying the same tax rate. It is not applicable to exports and has no 
bearing on the selling price structure of exported cars.  The 2
nd phase of Eco-Car scheme was announced in 2013 with the condition that the application 
must be made by 2014. To receive investment pr omotion under this scheme, certain criteria will 
                                               
10 TPR/326, page 73, paragraph 3.114. 
11 TPR/326, page 77, paragraph 3.126. 
12 TPR/326, page 77, paragraph 3.127. G/SCM/Q2/THA/27 
 
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  apply, including the minimum actual production of 100,000 cars by 4th year since the start of 
project and the requirement to have a certain process in the project.  
 
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