How to Start a FIntech Company in Thailand?

Driven by the rapid expansion of fintech, the global business environment has seen unprecedented change. This transformation, fundamentally reshaping business operations worldwide, has Southeast Asia at its forefront. As a region, Southeast Asia is leading the way in embracing fintech innovations and setting new trends.

In the ongoing globalization efforts of multinational corporations, one prominent destination in Southeast Asia is Thailand. This country has emerged as a strategic hub for fintech expansion. The digital marketplace in Thailand is thriving, fueled by favorable regulatory frameworks and supportive government policies that promote the growth of fintech initiatives. Furthermore, Thailand possesses a skilled and tech-savvy workforce, making it an attractive location for fintech companies.

While Thailand presents a highly favorable environment for fostering the growth of fintech, aspiring entrants must acknowledge the inherent challenges alongside the opportunities, particularly in setting up operations. Amidst various options, this article focuses on incorporation through Thailand's Board of Investment (BOI) as a viable route for establishing a presence in this dynamic market.

To effectively penetrate the thriving digital market of Thailand, the BOI application emerges as the optimal choice for fintech companies. This article presents a comprehensive overview of the substantial benefits offered by the BOI application. We will explore tax incentives, promoted industries, business categories within fintech, regulatory hurdles, and the application process. By gaining a thorough understanding of the advantages and intricacies of the BOI route, fintech companies can strategically navigate the landscape and capitalize on the immense potential of Thailand's digital market.

Fintech Landscape of Thailand

Thailand's fintech sector has witnessed a notable trajectory of growth in recent times. This remarkable development owes itself to a combination of factors. Supportive government policies, a tech-savvy and adventurous population, and a thriving startup ecosystem have all contributed to Thailand's success in the fintech domain. Presently, Thailand is ranked fifth in terms of fintech funding among Southeast Asian countries. The nation is focused on strengthening its digital monetary systems through the active engagement of commercial banks and the central bank.

Over the past three years, the nation has experienced exponential growth in digital financial transactions. E-wallets and mobile payment platforms have gained immense popularity, while peer-to-peer lending networks have emerged as a reliable alternative to traditional bank loans, enhancing the accessibility and convenience of credit.

Thai government support, including funding, mentorship, and incubation programs, has spurred the fintech sector's growth. Thailand 4.0 initiative promotes financial infrastructure development and fintech growth. Measures like tax benefits, R&D funding, and special economic zones encourage investment and innovation.

The central bank plans to enhance its infrastructure for electronic banking and fintech. Adopting the ISO 20022 standard simplifies electronic invoicing and factoring, empowering businesses to utilize transaction data.

The Bank of Thailand introduced a consultation paper on virtual bank licensing. Virtual banks will provide new financial solutions through digital channels. The bank plans to finalize regulations and start the application process in 2023, with a maximum of three licenses granted initially.

Acknowledging the vast opportunities in Thailand's fintech market, multinational companies are keen to capitalize on them. To do so effectively, many strategically leverage the benefits provided by the BOI (Board of Investment) application for fintech. This approach enables them to smoothly and efficiently enter this thriving market, maximizing their potential for success.

Benefits of BOI certification for the fintech sector

For foreign fintech companies seeking to enter the Thai market, the BOI certification offers a multitude of benefits that make it a compelling choice. These advantages encompass both tax incentives and non-tax incentives, creating a favorable environment for business growth and expansion.

BOI Tax Incentives

Corporate Income Tax exemption: Among the prominent advantages of acquiring BOI certification is the availability of lucrative tax incentives. While numerous BOI initiatives emphasize manufacturing and industrial sectors, BOI-approved fintech companies can enjoy substantial tax exemptions or reductions for a period of up to eight years. The duration of tax benefits is influenced by both the level of investment and the nature of business activities conducted. Relevant tax incentives include:

• Exemptions from corporate income taxes for a duration of three to eight years
• Exemptions from taxes imposed on dividends sourced from promoted projects during the corporate income tax holiday period
• Permission to carry forward losses as deductible expenses for a period of up to five years

The details of the BOI tax incentives can vary depending on the specific product or service offered by the promoted project. Additionally, the BOI aims to reduce regional disparities within Thailand. Therefore, the project's geographic location can affect the level of benefits it receives.

BOI Non-Tax Incentives

Foreign Ownership: In Thailand, certain fintech companies certified by the Board of Investment (BOI) could potentially bypass conventional restrictions and be granted the privilege of complete foreign ownership. This allowance offers enticing opportunities for international investors looking to establish a presence in the Thai market and could prove beneficial to those seeking to tap into the country's growing fintech industry

Easy Work Permit and Visa Processes: Companies certified by the BOI (Board of Investment) can enjoy expedited procedures when obtaining work permits and visas for foreign executives, professionals, and skilled workers. This streamlined process is aimed at facilitating the recruitment and retention of international talent, which contributes to a more diverse and skilled workforce. As a result, these certified companies can benefit from an enhanced ability to attract and retain top-notch international talent, leading to a more competitive and dynamic workforce.

Support and Facilitation: Certified fintech companies receive support and facilitation services from the BOI. These services assist businesses in efficiently navigating regulatory requirements, obtaining necessary licenses, and establishing connections with relevant government organizations.

Land Ownership: A unique privilege granted to BOI-certified companies is the authorization to possess land in Thailand for business purposes, a privilege not afforded to non-BOI applicants.

Repatriation of Profits: Entities certified by the BOI have the privilege of repatriating profits and investment-related funds with no restrictions.

Foreign Currency Remittance: With BOI certification, international businesses can remit money in foreign currencies, facilitating seamless financial operations and enhancing their global reach.

Safeguarding of Investments: Firms accredited by the BOI gain protection against nationalization, ensuring the safeguarding of their investments and business operations.

BOI promotion schemes for the tech industry in Thailand

Amongst the BOI-promoted activities, various tech sectors categorized within BOI Category 5 qualify for the promotion schemes offered by BOI. Some of the renowned tech industries that fall under this category include:

• Category 5.7: Under this category, two distinct types of software industries are eligible for BOI promotion:
• Category 5.8: E-Commerce
• Category 5.9: Digital Services (Including fintech). Digital services cover a vast spectrum of offerings, such as software platforms, managed services, and digital architecture design. These services also extend to various industry-specific fintech domains, encompassing insurtech, regtech, medtech, agritech, and more.

A Fintech company can qualify for BOI promotion on meeting the following conditions:

• Before applying for BOI Thailand investment promotion, one must secure approval from Thailand's Ministry of Digital Economy and Society.
• The project should involve hiring digital specialists and have a capital investment (excluding land and working capital costs) of at least 1 million baht (approx. USD 28,000).
• Projects must incorporate digital services into their offerings.
• Projects with investments of 10 million baht or above (excluding land and working capital expenses) must obtain ISO2000 certification or other quality standards approved by Thailand's Ministry of Information and Communication Technology within two years of commencing full operations.
• Revenue generated from sales or services directly related to the promoted digital services business will be considered revenue for the promoted business.

Promoted business categories within the fintech sector in Thailand

Acknowledging the pivotal strategic significance and potential of the fintech sector to stimulate robust economic growth in the country, the BOI actively supports and promotes investments in specific segments of the industry. Within the fintech sector, some of the encouraged business categories are as follows:

Digital payments and e-wallets: Among the fintech sectors that attract the Bank of Thailand's (BOI) attention is the realm of digital payments and e-wallets. The BOI's framework provides incentives to companies that specialize in delivering reliable and convenient digital payment solutions. These incentives not only drive innovation in payment technologies but also make digital financial services more accessible and user-friendly for the Thai population.

Peer-to-peer (P2P) lending platforms: The BOI provides backing to fintech companies involved in facilitating peer-to-peer lending endeavors. This sector holds significant promise in broadening access to finance and empowering individuals and small enterprises to obtain loans or investments from a community of peers. Aligned with its mission to mitigate regional inequalities, the BOI fosters investment in P2P lending platforms, thus enhancing the diversity of T