Regional Trade & Business Center (“IBC”) Regime in Thailand

Thailand’s International Business Centre (IBC) regime serves as the modern replacement for the older International Trade Center (ITC) and International Headquarters (IHQ) regimes. Designed to position Thailand as a regional hub for business services, financial operations, and cross-border trade, the IBC offers a package of tax and non-tax incentives for eligible entities. At BASE Law Firm, we help international corporations assess and secure IBC status, ensure ongoing compliance, and optimize the benefits available under this regime.

Our service include:

IBC eligibility and structuring advice
Incentive application and BOI supportTax optimization for IBC operations
Compliance with staffing and spending rules
Transfer pricing and risk management
Ongoing reporting and regulatory guidance

What Is an International Business Centre (IBC)?

An IBC in Thailand is a locally incorporated company that carries out certain high-value, cross-border functions on behalf of its group — for example:

Providing administrative, management, research, procurement, technical, or human-resources support to its affiliates.
Operating as a treasury centre, managing liquidity, intra-group loans, and financial planning.

Supporting international trade activities (though not permitted to operate as a pure trading-only company under the IBC regime; it must also provide at least one of the qualifying services).

Key Requirements to Qualify as an IBC

To be eligible for the IBC regime, a company must satisfy a number of conditions:

Capital & Local Expenditure
- The IBC must have a minimum paid-up capital of THB 10 million at the end of each accounting period.
- It must spend locally (at least THB 60 million per year paid to Thai recipients) to qualify for incentives.
Human Resources
- For a standard IBC, at least 10 skilled, full-time employees are required.
- If the IBC is operating purely as a treasury centre, the threshold is 5 skilled employees.
Business Activity
- The company must provide permitted service functions (e.g., management, technical support, procurement, R&D, financial advisory).
- Alternatively, it may engage in international trade, but this must be paired with at least one of the service activities.

Tax & Incentive Benefits Under the IBC Regime

Once approved by the Thai Revenue Department, an IBC may secure a range of benefits under the IBC regime (typically granted for 15 accounting periods). Key incentives include:

Reduced Corporate Income Tax
- If local annual expenditure is at least THB 60 million → CIT rate = 8%
- If local expenditure reaches THB 300 million → CIT rate = 5%
- If local expenditure is THB 600 million or more → CIT rate = 3%
Dividend & Interest Exemptions
- Dividends received from affiliated companies (domestic or foreign) are exempt from CIT.
- Withholding tax may be exempt on:
  - Dividends paid by the IBC to foreign shareholders, and
  - Interest on loans used for intra-group treasury operations.
Specific Business Tax (SBT) Relief
- Income from treasury / financial-management services may be exempt from SBT.
Personal Income Tax for Expatriates
- Full-time foreign employees working for the IBC may be taxed at a flat 15% PIT rate, under certain conditions.
Non-Tax Incentives via BOI
For IBCs that also obtain BOI (Board of Investment) certification:
- Up to 100% foreign ownership is permitted.
- Rights to own land for business purposes.
- Faster visa/work permit processing for expatriate staff.
- Import-duty exemptions for machinery used in R&D or training activities.

Risks, Compliance & Key Considerations

Setting up under the IBC regime is strategically attractive, but there are important caveats:

Claw-back Risk: If the IBC fails to respect its expenditure or employee requirements in a given year, incentive benefits may be revoked for that year — or in repeated non-compliance, the IBC status could be terminated.
Transfer Pricing Scrutiny: Transactions between the IBC and its group (services, treasury) should be carefully documented and priced — aggressive pricing may trigger audits.
Regime Transition: The IBC regime replaced the older IHQ and ITC regimes in late 2018.
Sustaining Substance: To maintain IBC status, the company needs real economic activity in Thailand, not just a shell — including meeting local spending and staffing thresholds.

How BASE Law Firm Supports IBC Clients

At BASE Law Firm, we guide corporate clients through the entire IBC lifecycle:

Feasibility & Strategy
We assess whether a Thai IBC aligns with your group’s regional structure and growth plan, including expenditure projections, staffing, and service models.
Application & Approval
We prepare and submit applications to both the Revenue Department (for tax incentives) and the BOI (for non-tax incentives), ensuring complete documentation.
Substance & Compliance
We help you set up your IBC operations in a way that meets all substance requirements, including hiring, local expenses, and financial flows.
Ongoing Reporting
We assist with structuring your accounting and reporting systems (e.g., separate books for IBC vs. non-IBC activities) and fulfill the yearly compliance and audit obligations.
Risk Management & Exit Planning
If conditions change, or if you need to convert or wind down the IBC, we advise on exit strategies or transitions — minimizing disruption while preserving value.

Conclusion & Next Steps

The IBC regime offers multinational groups a powerful tool for regional consolidation, cost-efficient centralized services, and favorable tax treatment, but only if structured correctly. BASE Law Firm has the experience, legal insight, and strategic vision to help you assess, apply, and maintain International Business Centre status in Thailand.

If you’re considering investing in an IBC, or converting an existing IHQ / ITC into this new framework, contact BASE Law Firm for a consultation. We’ll help you chart a clear and compliant path to unlock Thailand’s IBC benefits.