Locating in a Thai industrial estate: BOI promotion, IEAT, or both?

01First distinction: a general industrial zone is not the same thing as a free zone

Chinese-invested manufacturers choosing a site often ask whether locating inside an industrial estate is the same as getting promotion, or worry that whatever BOI will not give, the estate will not give either. Neither assumption holds. The Industrial Estate Authority of Thailand (IEAT) Act and the Investment Promotion Act are separate pieces of legislation with different legal sources, even though a number of their benefit clauses read almost the same way once placed side by side.

The IEAT Act splits "industrial estate" into two kinds that sit at entirely different levels of benefit. A general industrial zone is designated for industrial, service and related business operations. A free zone is designated so that goods brought into it carry additional rights and privileges on duty, tax and fees. Which kind of zone a site falls in decides how imported materials are handled from that point on — this needs settling before the lease is signed, not after.

02IEAT and BOI benefits line up clause for clause, but they are not the same track

Set the two laws' benefit clauses side by side and it becomes clear they are parallel legislation, drafted in matching pairs — that is not a coincidence, it reflects two independent policy channels.

• Land ownership. Under the IEAT Act, a company inside an estate — including a free zone — may be permitted to hold land within the estate, with the area set by the board and allowed to exceed the general limits other laws place on foreign land holding. Section 27 of the Investment Promotion Act gives BOI-promoted companies a comparable arrangement. The two routes stand on their own and do not depend on each other. See how the BOI land privilege works, and where it has since been narrowed.
• Bringing in foreign technicians and experts. The IEAT Act allows technicians, experts and their spouses and dependants to enter on numbers and residence periods the board approves, exceeding the ordinary quota. Section 25 of the Investment Promotion Act reads almost word for word the same way. Both regimes only approve the specific positions granted — moving someone into a different role or adding a role is out of bounds under either one.
• Remitting foreign currency. An operator domiciled abroad may remit the capital brought in together with its dividends or other returns, and interest on board-approved borrowing brought in for the project. The structure is the same under both laws.

One thing the IEAT Act does not give: corporate income tax exemption is not on its list of benefits at all — that belongs to the Investment Promotion Act. If corporate income tax exemption is the goal, BOI promotion is the only route. That is exactly why the two regimes are usually worth considering together rather than as a choice between one or the other.

03The free zone runs two separate gates: generous going in, clawed back coming out

A project located in a free zone has its own import mechanism, separate from the import exemption under BOI promotion, and it covers more ground: goods brought into a free zone can be exempted in one go from special fees under the investment promotion law, import duty, VAT and excise tax. Section 28 of the Investment Promotion Act, by contrast, exempts import duty only.

This is not a permanent exemption — it is a deferral. Materials enter the free zone exempt, get processed inside it, and if the output is ultimately exported, the exemption stands. But if the processed goods are taken out of the free zone for sale or use inside Thailand, import duty, VAT, excise tax and the special fee under the investment promotion law all become payable in full — and this covers more than the original imported materials, extending to the finished products, by-products and other output made inside the free zone.

The point most often misread: a free zone exempts exports, not domestic sales. That is the same logic as Section 36 of the Investment Promotion Act, which exempts raw material imports only to the extent they are used for export. On this point the two regimes are consistent. A free zone pays off for a line that is mostly export-facing; a project mixing domestic and export sales needs a materials-management system that can separately track and settle the domestic portion, or the accounts will not reconcile when goods leave the zone.

04Four questions to settle before you commit to a site

Four questions, in the order they matter.

• Do you need to own the land? If so, holding land inside an IEAT industrial estate under the estate legislation and holding it under BOI promotion are two independent routes with different legal sources, and can be assessed separately.
• Is output mainly for export or for the domestic market? Export-facing lines get more out of the free zone's wider exemption than the BOI import-duty-only exemption. Domestic-facing lines will see most of that exemption clawed back on the way out, which cuts the free zone's value sharply.
• Do you need corporate income tax exemption? None of the IEAT Act benefits include it — BOI promotion is the only route. The two regimes can be pursued together rather than as an either-or choice. See what BOI does and does not exempt.
• How are foreign staff positions structured? Both regimes provide a channel, but both lock staff into the positions approved — check whether a role change still falls inside what was approved before making it.

Which type of zone a specific project should sit in, whether the two sets of benefits can be combined, and how to design the accounting for goods leaving a free zone all need checking against the site, the export share of output and the size of the investment. Have our advisers verify the current announcements against the facts of the case before the lease is signed or the BOI application filed.