How Many Years of Tax-Free Profit Does BOI Actually Give You?

The BOI tax holiday hands you years of zero corporate income tax on your promoted profit. How many years is the real question, and the answer runs anywhere from 3 to 13 depending on what your business does.

The tax break is one of the biggest reasons to get BOI promotion in the first place. Instead of the normal 20% corporate income tax, a BOI-promoted company pays none of it on the profit from its promoted activity, for a fixed run of years set when your promotion is approved.

The length isn’t a flat number, though. It’s tied to which activity group your project falls into, from the top-priority A1+ activities down to Group B, which gets no holiday from its group at all. Two companies can both be BOI-promoted and still end up with very different tax outcomes.

This guide walks through all of it: how the holiday works, how many years each activity group gets, the cap, how to stretch the exemption with extra merits, and how you claim it and keep it. Every figure comes from the BOI’s own promotion guide. By the end you’ll know roughly how many tax-free years your own project can expect, instead of banking on a number someone quoted you.

How the Tax Holiday Works

Thailand’s standard corporate income tax is 20% of net profit. A BOI corporate income tax exemption, granted under Section 31 of the Investment Promotion Act, means your promoted company pays none of that for a set number of years.

The exemption only covers the promoted activity. BOI promotes a specific project, not your whole company. If your business also earns income from activities that aren’t on your promotion certificate, that income is taxed normally at 20%. In practice that means keeping separate accounts for promoted and non-promoted income, because the Revenue Department will want to see the line drawn clearly.

It applies to net profit, not revenue. The holiday doesn’t exempt your sales; it exempts the profit left after costs. So a promoted business that isn’t yet profitable isn’t “wasting” its holiday in the sense of paying tax, but it also isn’t getting value from it until the profit shows up. This is why the timing of your exemption clock matters, and why heavily front-loaded, capital-hungry projects often value the import duty exemptions just as much: those save you money from day one, while the tax holiday only pays off once you’re in the black.

How Many Years by Activity Group

BOI sorts every promoted activity into a group, and the group sets the length of your tax holiday.

The groups run from A1+ (the highest priority, usually advanced technology and BCG activities) down to B (supporting activities that get non-tax perks but no exemption). Each activity’s group is printed next to it in BOI’s list of promoted activities, so you don’t have to guess it. You look it up.

Group	CIT exemption	Cap on total tax saved
A1+	10 to 13 years	No cap
A1	8 years	No cap
A2	8 years	100% of investment
A3	5 years	100% of investment
A4	3 years	100% of investment
B	None	Keeps duty and non-tax incentives only

For A2, A3, and A4, your tax holiday runs for the stated number of years or until the tax you’ve saved equals 100% of your investment (not counting the cost of land or your working capital), whichever comes first.

So an A3 project with a five-year holiday but a modest investment might use up its cap in year three or four and start paying tax again early. A1+ and A1 have no such ceiling: the exemption runs the full term regardless of how much you save.

Good to Know: Group B doesn’t get a corporate tax holiday from its group, but don’t write it off. B activities still keep the machinery and raw-material import duty privileges and the non-tax incentives like owning land and bringing in foreign experts, and the R&D merit below can still earn a B project one to five exempt years. For some supporting businesses, those are the whole reason to get promoted.

Adding More Years with Merit

Your activity group only sets the starting figure. BOI runs three merit incentives that add exemption years on top of it, and they stack, so one project can qualify for more than one.

Merit 1: Competitiveness Enhancement

This merit is worth the most years, and it rewards spending money on the things BOI wants more of in Thailand. Qualifying spend covers:

• Research and development
• Licensing fees for using technology developed in Thailand
• Product and package design
• Funding for universities, research institutes, specialised training centres, and public agencies
• Advanced technology training for your staff
• Running training or taking student interns from science and technology courses
• Developing local suppliers

BOI measures that spend against your sales over your first three years and pays you back in exemption years on a fixed scale.

Qualifying spend in your first three years	Extra exemption years
1% of sales, or THB200,000,000	1 year
2% of sales, or THB400,000,000	2 years
3% of sales, or THB600,000,000	3 years
4% of sales, or THB800,000,000	4 years
5% of sales, or THB1,000,000,000	5 years

You hit each rung on whichever of the two measures is lower, which is what makes this reachable for a normal-sized company rather than only for factories. Take a software company billing THB60,000,000 over its first three years:

• THB600,000 of qualifying spend is 1% of sales, well under the THB200,000,000 alternative, so that earns 1 extra year
• THB3,000,000 is 5% of sales, which earns the full 5 extra years
• That takes an eight-year A2 holiday to 13 years

The scale runs differently at the top of the table, and the spend buys you more than years:

• A1+ is capped lower. Most groups earn 1 to 5 extra years here. A1+ projects earn only 1 to 3, since they start at 10 to 13 already.
• Your cap goes up too. Qualifying spend lifts your exemption cap by 200% of what you spent, so the extra years come with extra room to use them.

Good to Know: There’s a bonus route inside this merit. If your qualifying spend is specifically on R&D and it reaches 1% of first-three-year sales or THB200,000,000, whichever is lower, your corporate income tax exemption becomes uncapped, whatever group you’re in. An A2 or A3 project that would normally stop at 100% of its investment can keep saving tax with no ceiling.

Merit 2: Decentralization

Thailand’s investment is heavily concentrated around Bangkok and the eastern seaboard, so BOI pays companies to go elsewhere. Put your project in one of the 20 provinces with the lowest per capita income and you get three extra years of exemption.

The 20 provinces are Kalasin, Chaiyaphum, Nakhon Phanom, Nan, Bueng Kan, Buri Ram, Phatthalung, Phrae, Maha Sarakham, Mukdahan, Mae Hong Son, Yasothon, Roi Et, Si Sa Ket, Sakon Nakhon, Sa Kaeo, Surin, Nong Bua Lamphu, Ubon Ratchathani, and Amnat Charoen. Most are in Isaan, the northeast.

Those three years apply to every group except A1 and A2:

• A4: 3 years becomes 6
• A3: 5 years becomes 8
• A1+: 3 extra years, up to the 13-year ceiling
• A1 and A2: no extra exempt years, since they already sit at the eight-year cap. They get a 50% corporate tax reduction for 5 years once the exemption expires instead, which is the second phase covered further down.

This merit also comes with two deductions that have nothing to do with the holiday itself:

• Double deduction on transportation, electricity, and water costs for 10 years
• An extra 25% deduction on what it cost to install or build your facilities

For a project with a physical footprint, those two are often worth more than the extra exemption years.

Merit 3: Industrial-Area Development

Set up inside a BOI-promoted industrial estate or industrial zone and you add one year to your exemption. It’s the smallest of the three merits and the easiest to qualify for, since it asks nothing of you beyond choosing the right address. It’s also the narrowest:

• A1+, A3, and A4: 1 extra year. An A3 project goes from 5 years to 6.
• A1 and A2: nothing, since they’re already at their cap. An A2 software company in a promoted estate stays at 8 years.
• Group B: nothing.

If your activity is one that BOI requires to be inside an industrial estate anyway, you don’t get the year. You only earn it if locating there was a choice you made rather than a condition you had to meet.

The Ceiling on All of It

Merits stack, but not without limit:

• Most activities: 8 years of exemption in total, however many merits you add
• A1+, A1, and A2: up to 13 years

We go deeper on each merit in the incentives guide.

The 50% Reduction After the Holiday

The full exemption isn’t always the end of the tax break. Under Section 35 of the Act, some projects get a second phase: a 50% reduction of corporate income tax on the promoted activity for up to five more years after the exemption ends. Instead of paying the full 20%, you pay 10% for that stretch.

This isn’t handed to everyone automatically. It comes mainly through the decentralization merit, as the swap A1 and A2 projects get in place of extra exempt years. It also only starts once the full exemption has run out, so it extends your benefit rather than running alongside it, and like the exemption it covers the promoted activity’s income only.

So if you see a project described as “8 + 5,” that’s an eight-year full exemption followed by five years at half rate. That second phase is worth real money: on THB10,000,000 of annual promoted profit, paying 10% instead of 20% saves you THB1,000,000 a year.

Tax-Free Dividends During the Holiday

Normally a dividend from a Thai company carries a 10% withholding tax. During your BOI holiday, dividends paid out of the exempt profit don’t, under Section 34 of the Act.

For founders and investors actually taking money out of the business, that stacks a second layer of saving on top of the company-level exemption. The profit escapes corporate tax at 20% on the way in, then escapes withholding at 10% on the way out to shareholders. Section 37 of the same Act lets a promoted company remit that money abroad in foreign currency, which is what makes the combination useful to a foreign owner rather than just a Thai one.

The catch is timing. The dividends have to be paid while the holiday is still running and out of profit that was exempt, so it pays to plan distributions around the exemption window rather than letting profit pile up untouched until after it closes. Companies that reinvest everything for eight years and then start paying dividends in year nine hand back a benefit they had already earned.

Everything Stacked Up: A Software Example

Software development is activity 8.1.1 in BOI’s list and sits in Group A2, which makes it a clean sample for stacking all of the above.

Tax benefit	What it gives you	Software project (A2)
Standard CIT exemption	3 to 13 years, by activity group	8 years
Competitiveness enhancement	1 to 5 extra years for R&D and tech spend	Up to 13 years in total
Decentralization	3 extra years, or the 50% reduction for A1 and A2	5 years at 10% CIT
Industrial-area development	1 extra year for A1+, A3, and A4	Not available
Dividend exemption	10% withholding waived on exempt profit	Yes, while the holiday runs

A software company that invests properly in R&D and sets up in the right province can therefore run 13 years at zero corporate tax, another five at 10%, and pay its owners dividends tax-free throughout the first stretch. Swap the group and the same table gives you a different answer: an A4 project starts at three years, an A3 at five, and a Group B activity has to earn its years through merit alone.

Good to Know: Not every software project lands in A2. Developing your own software, digital platform, or digital content is activity 8.1.1 and gets the eight years. Modifying software that already exists is activity 8.1.2, which sits in Group B and gets no standard exemption at all. How your project is described on the application decides which one you get.

How You Claim It, and Keep It

Getting the exemption granted on your promotion certificate is not the same as pocketing it. The holiday is claimed and maintained through two separate systems, and slipping on either one is how companies lose a benefit they were entitled to.

Claiming it. You take the exemption through the Revenue Department’s e-filing when you file your corporate tax return, and it has to be signed off by a certified independent auditor who confirms the exempt profit is genuinely from the promoted activity. This is where those separate promoted and non-promoted accounts earn their keep.

Keeping it. BOI wants proof your project is actually happening. You file progress reports through its e-Monitoring system every quarter, within 60 days of each quarter’s end, from the time your certificate is issued until your operating licence is granted. You also have to reach full operation within 36 months of the certificate being issued. A late or missed report can automatically suspend your BOI privileges, including visa and work permit processing, until you file, and two consecutive misses can cost you the promotion entirely.

Tip: The quarterly report is the single easiest BOI benefit to lose by accident. It’s an administrative box-tick, not a hard task, but the suspension it triggers is automatic. Put the four deadlines in your calendar the day your certificate is issued, and treat them like tax deadlines, because functionally that’s what they are. We walk through the full obligations in our BOI compliance guide.