Thailand has long been a prime destination for both leisure and business tourism, making hotel and resort operations an attractive investment opportunity. For both Thai and foreign investors, the Board of Investment (BOI) offers a variety of incentives to promote investment in the hotel sector. In the last few years, our Bangkok Corporate Lawyers team at H&P Herrera and Partners law firm in Thailand has advised foreign investors in hotel projects in Samui, Phuket, Krabi, Khao Lak and Bangkok.
BOI Incentives for Hotel Operations
Hotels in Thailand can be promoted under Category 10.9.1 – Hotel Operations under the following conditions regarding the number of rooms and investment requirements:
- For hotels with 100 rooms or more, the investment per room (excluding land and working capital) must be at least THB 2 million per room.
- 2 For hotels with fewer than 100 rooms, the total investment (excluding land and working capital) must be at least THB 500 million.
- For hotels promoted under SME investment incentives, the number of rooms must be between 20–99 rooms, with an investment per room (excluding land and working capital) of at least THB 1 million per room.
If a hotel has 20 rooms and an investment of THB 1 million per room, it is eligible to apply for BOI promotion under the Small and Medium Enterprise (SME) scheme, provided the following conditions are met:
SME Requirements:
- Minimum investment per project must be at least THB 500,000 (excluding land and working capital).
- Thai natural persons must hold at least 51% of the registered capital, and more than half of the authorized directors must be Thai nationals.
- The Debt-to-Equity Ratio must not exceed 4:1.
- Used machinery already located in Thailand may be utilized in the promoted project with a value not exceeding THB 10 million, calculated based on book value.
- New investment in core machinery must account for at least 50% of the total machinery value used in the project.
- If the project is located in a Special Economic Development Zone, new core machinery investment must be at least one-fourth of the total machinery value used.
Furthermore, when combining both BOI-promoted and non-promoted businesses, the applicant’s total annual revenue must not exceed THB 500 million during the first three years from the date revenue is first generated from the promoted business.
Hotels must comply with BOI standards regarding facilities, service quality, and safety.
Types of Incentives
The incentives granted will be either Type A3 or B and cover both tax and non-tax benefits:
- Tax Incentives:
- Exemption or reduction of corporate income tax for a period of 5 years.
- Exemption of import duties on machinery and equipment necessary for hotel operations.
- Non-Tax Incentives:
- Permission for foreign ownership exceeding 49% as normally restricted under the Foreign Business Act.
- Visa and work permit facilitation for foreigners under BOI promotion.
However, some limitations apply. Hotels located in primary cities (such as Bangkok or Phuket) may not be eligible for import duty exemptions, while hotels in secondary tourist provinces receive full incentives, including duty-free import of machinery.
Incentives are assessed by the board of BOI based on project size.
Even with BOI promotion, additional licenses must be obtained, such as Construction Permit and Hotel Operating License.
Alternative Methods for Establishing Hotels in Thailand
For investors who may not qualify for BOI incentives, other legal frameworks can be considered:
- Amity Treaty – Allows U.S. citizens to hold more than 49% of shares in a Thai company under certain conditions, including the hotel business.
- Foreign Business Act (FBA) – For hotel operations under Category Three (17), a Foreign Business License (FBL) is required.
- Joint Ventures with Thai Partners – Partnering with local investors ensures compliance with Thai law while leveraging local knowledge and networks.
Conclusion
Investing in the hotel sector under BOI offers significant advantages, especially regarding tax exemptions and flexibility in foreign ownership. Careful evaluation of location, number of rooms, and applicable incentives helps investors maximize operational efficiency and profitability. For investors who cannot access BOI benefits, alternative frameworks such as the Amity Treaty, FBL application, or joint ventures with Thai partners provide viable paths to establish and operate hotels successfully in Thailand.
If you would like to discuss your hotel project with our corporate lawyer’s team in Thailand, please contact us to schedule a legal consultation at info@herrera-partners.com
