Tax cuts passed for hi-tech ventures, startup bourse coming

Thailand’s Cabinet approved a raft of tax cuts and incentives last week for businesses investing in industries supportive of Thailand 4.0, the national strategy to develop a more innovative and high-technology economy, as the Stock Exchange of Thailand president told the press that it will set up a new exchange specifically for startups next year.

The moves are designed “to enhance national competitiveness and make Thailand a more attractive investment destination in Asia,’’ said the Enterprise innovation website. “The incentives, however, are limited to projects that use high technology, high innovation, and research and development [R&D] in the production,’’ the site added.

Under the amendments to the Investment Promotion Act of 1977, the corporate income tax exemption period will be extended from the current 8 years to 13 years. The 50 percent tax reduction will also be extended to up to 10 years. The law also included an exemption on import duties of products that are imported for R&D purposes. The amendments have passed the Council of State and passage by the National Legislative Assembly is expected.

A new board will be established under the Country Competitiveness Enhancement Act that will consider and screen projects for eligibility to obtain financial support from the $34 billion Thailand Future Fund. The board can provide corporate income tax exemptions for up to 15 years and grant capital to support investments with specific criteria.

According to the Board of Investment, during the first seven months of this year, it received 143 project applications with a total investment value of $113 million that fell under industries in the digital economy. This represented an 85.7 percent increase in project applications and a 237 percent increase in investment value compared to the same period last year.

In another move to boost competitiveness through innovation, the Stock Exchange of Thailand (SET) expects to launch a special exchange just for startups in the third quarter of next year, according to SET President Kesara Manchusree.

Requirements for listing on the startup exchange would be much more flexible. For instance, a startup would not have had to have earned any revenue before listing, and could go public the very day they are founded. As they would be much more speculative investments, the SET decided to create a separate exchange for them, so as not to confuse retail investors who may not be as savvy as institutional or large investors.

The SET will also create another exchange for small cap stocks called sSET. This exchange is slated for launch in January and is expected to have about 100 small companies on its roster.