On 14 June 2022 Thailand Tax Royal Decree (No 750) was gazetted providing personal and corporate income tax incentives to invest in Targeted Industry Companies.

This Tax Insight summarizes the tax incentives provided in RD (No 750).

Targeted Industry Companies

Targeted Industry Companies are corporate entities established under the laws of Thailand that develop and/or apply technology or innovation as an important part of their business operations in a targeted industry that the Government promotes under the National Competitiveness Enhancement of Targeted Industries Act 2560 which includes the following industries:

1. Next generation automotive		2. Smart electronics
3. Affluent and medical tourism		4. Agriculture and biotechnology
5. Food for the future		6. Automation and robotics
7. Aviation and logistics		8. Biofuel and biochemicals
9. Digital technology		10. Medical technology
11. Human resource management		12. Renewable energy

The Tax Incentives Under Royal Decree (No 750)

The tax incentives for individual and corporate entity investors in Targeted Industry Companies under RD (No 750) are as follows:

Applicability

From 15 June 2022 to 30 June 2032.

Direct Investments in a Targeted Industry Company

For the direct investments by individual and corporate investors in the shares of a Targeted Industry Company:

• An exemption from income tax on capital gains income that is derived from a transfer of shares in the Targeted Industry Company.

Indirect Investments in a Targeted Industry Company via a Venture Capital Company or Venture Capital Trust

For the investments by individual and corporate investors in a Targeted Industry Company via shares or units held in a Venture Capital Company or Trust:

• If the Venture Capital Company or Trust does not have retained earnings from the Targeted Industry Company, an exemption from income tax on capital gains income derived from a transfer of the shares or units in the Venture Capital Company or Trust in proportion to the Venture Capital Company's or Trust's investment in the Targeted Industry Company;
• If the Venture Capital Company or Trust has retained earnings from the Targeted Industry Company, an exemption from tax on the capital gains income derived from a transfer of the shares or the units in the Venture Capital Company or Trust in full; and
• If the Venture Capital Company or Trust dissolves, an exemption from income tax on capital gains income derived from the dissolution of the Venture Capital Company or Trust in proportion to the Venture Capital Company/Trust's retained earnings from the Targeted Industry company.

Rules, Procedures and Conditions

The rules, procedures and conditions for the investment tax incentives specified in Royal Decree (No 750) are as follows:

1. For direct investments by individual and corporate investors:

1. The shares in the Targeted Industry Company shall have been held for not less than 24 months prior to the date the individual or corporate investor transferred the shares in the Targeted Industry Company,
2. The Targeted Industry Company shall have earned not less than 80% of its total income from its targeted industry business in each of the 2 years prior to the date the individual or the corporate investor transferred the shares in the Targeted Industry Company, and
3. An individual or corporate entity that exercises the tax incentive under this Royal Decree (No 750) shall not have exercised the tax incentive under the Royal Decrees (No 597) or (No 636).

2. For indirect investments by individual and corporate investors via a Venture Capital Company or Trust:

1. The Venture Capital Company or Trust shall have paid-up capital on the last day of each of its financial years that's not less than 20 million baht;
2. The Venture Capital Company or Trust shall be registered under the law governing securities and exchange;
3. The Venture Capital Company or Trust shall not have exercised any right to investment incentives under Royal Decrees (No 597) or (No 636);
4. The shares in the Venture Capital Company or Trust shall have been held for not less than 24 months prior to the date the individual or corporate entity investor transferred the shares or units in the Venture Capital Company or Trust;
5. The Targeted Industry Company shall have earned not less than 80% of its total income from its targeted industry business in each of the 2 years prior to the date the individual or the corporate investor transferred the shares or units in the Venture Capital Company or Trust; and
6. An individual or corporate entity that exercises the investment incentive right under this Royal Decree (No 750) shall not have exercised any right to an investment incentive under the Royal Decrees (No 597) or (No 636).

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