Pharmaceutical and Medical device industries in Thailand are growing to meet the increasing demand for healthcare needs. To speed up the market access while ensuring the affordability and cost-effectiveness of healthcare products, the Thai government is implementing certain policies and incentives.
Following section details the incentive benefits for the pharmaceutical and medical device industries and the conditions required to gain the benefits.
Healthcare Financing and Reimbursement Schemes in Thailand
Thailand offers incentive schemes through the Board of Investment (BOI) to promote the manufacturing of pharmaceuticals and medical devices. These schemes include Corporate Income Tax Exemption for a certain period, import duty exemptions on raw materials, and non-tax incentives to promote investment and strengthen Thailand’s healthcare industry.
Government Authorities Supporting the Industry in Thailand
Thai Government supports the industry through multiple authorities by offering incentives, enforcing rules and regulations, supporting the innovation, and development of the industry as follows:
Board of Investment (BOI)
The Office of the Board of Investment (BOI) is a government agency under the Office of the Prime Minister to promote valuable investment both into Thailand and overseas to strengthen the overall national economic and social systems.
To get investment promotion under the Investment Promotion Act, which provides tax and non-tax incentives, the BOI applicant must comply with the conditions specified in the BOI promotion certificate.
Thailand Food and Drug Administration (Thailand FDA)
Thailand Food and Drug Administration, under the Ministry of Public Health (MoPH), ensures protection health products consumers for the benefit of the good health of the public.
Ministry of Public Health (MoPH)
Ministry of Public Health (MoPH) of Thailand oversees the public health initiatives and healthcare services nationwide.
National Innovation Agency (NIA)
National Innovation Agency (NIA), as one of the Program Management Units (PMUs), is responsible for overseeing funding for innovation and research utilization. It was established in 2003 under the Ministry of Science and Technology to create an effective national innovation system for Thailand.
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Incentives Available for Pharma & Medical Device Industry in Thailand
Following table list the industry types and businesses under this that are eligible to gain incentives under the investment promotion Act:
| Industry Type | Government-Incentivized Business Activities |
| Pharmaceuticals | Manufacture of active pharmaceutical ingredients |
| Pharmaceuticals | Manufacture of targeted medicines |
| Pharmaceuticals | Manufacture of conventional medicines |
| Medical Devices | Manufacture of high-risk or high-technology medical devices |
| Medical Devices | Manufacture of other medical device |
| Medical Devices | Manufacture of medical devices made of fabrics or fibers |
| Medical Devices | Manufacture of medical device parts |
| Medical Products | Manufacture of non-woven fabric |
| Medical Products | Manufacture of hygienic products from non-woven fabric |
Detailed description for each of the business type with the required conditions and incentives granted in Thailand for pharma and medical device industries is given below.
Government Schemes for Pharma Industry in Thailand
1) Manufacture of Active Pharmaceutical Ingredients (APIs)
Projects manufacturing Active Pharmaceutical Ingredients are granted incentives under this type.
Eligibility: The project must manufacture active ingredients or raw materials of active pharmaceutical ingredients.
Incentives granted:
- A 8-Year Corporate Income Tax Exemption with a Cap (A2)
- Exemption of Import Duties on Machinery
- Exemption of Import Duties on Raw Materials Used in R&D
- Exemption of Import Duties on Raw Materials Used in Production for Export
- Non-tax Incentives
2) Manufacture of Medicines
Medicine manufacturing involves incentives for the manufacturing of targeted and conventional medicines.
2.1 Manufacture of Targeted Medicines
Eligibility:
- The project must manufacture targeted medicine as announced by the Ministry of Public Health as of the submission date of promotion application.
- The project must be certified by an international standard such as Good Manufacturing Practice (GMP) in accordance with Pharmaceutical Inspection Co-operation Scheme (PIC/S). The certification must be completed before the full operation deadline.
Incentives granted:
- A 8-Year Corporate Income Tax Exemption with a Cap (A2)
- Exemption of Import Duties on Machinery
- Exemption of Import Duties on Raw Materials Used in R&D
- Exemption of Import Duties on Raw Materials Used in Production for Export
- Non-tax Incentives
2.2 Manufacture of Conventional Medicines
Eligibility: Project must be certified by an international standard such as Good Manufacturing Practice (GMP) in accordance with Pharmaceutical Inspection Co-operation Scheme (PIC/S). The certification must be completed before the full operation deadline.
Incentives granted:
- A 5-Year Corporate Income Tax Exemption with a Cap (A3)
- Exemption of Import Duties on Machinery
- Exemption of Import Duties on Raw Materials Used in R&D
- Exemption of Import Duties on Raw Materials Used in Production for Export
- Non-tax Incentives
Also Read: Thai FDA Pharmaceutical Regulations
Thailand Healthcare Supporting Products Incentives
This medical products business type involves incentives for the manufacturing of non-woven fabric and hygienic products from non-woven fabric.
1. Manufacture of non-woven fabric
Incentives granted:
- A 5-Year Corporate Income Tax Exemption with a Cap (A3)
- Exemption of Import Duties on Machinery
- Exemption of Import Duties on Raw Materials Used in R&D
- Exemption of Import Duties on Raw Materials Used in Production for Export
- Non-tax Incentives
2. Manufacture of hygienic products from non-woven fabric
Incentives granted:
- A 3-Year Corporate Income Tax Exemption with a Cap (A4)
- Exemption of Import Duties on Machinery
- Exemption of Import Duties on Raw Materials Used in R&D
- Exemption of Import Duties on Raw Materials Used in Production for Export
- Non-tax Incentives
Government Schemes for Medical Devices in Thailand
1) Manufacture of high-risk or high-technology medical devices
This category involves incentives for applicants manufacturing high-risk or high-technology medical devices.
The incentives granted are as follows:
- A 8-Year Corporate Income Tax Exemption with a Cap (A2)
- Exemption of Import Duties on Machinery
- Exemption of Import Duties on Raw Materials Used in R&D
- Exemption of Import Duties on Raw Materials Used in Production for Export
- Non-tax Incentives
2) Manufacture of other medical devices
Eligibility: Manufacture of medical devices made of fabrics or fibers shall not be promoted.
Incentives granted:
- A 5-Year Corporate Income Tax Exemption with a Cap (A3)
- Exemption of Import Duties on Machinery
- Exemption of Import Duties on Raw Materials Used in R&D
- Exemption of Import Duties on Raw Materials Used in Production for Export
- Non-tax Incentives
3) Manufacture of medical devices made of fabrics or fibers
The applicants manufacturing medical devices made of fabrics or fibers are granted the following incentives if qualified under the eligible conditions.
Eligibility:
- Project must manufacture medical devices made of fabrics or fibers such as gowns, drapes, caps, face masks, gauze, or cotton wool.
- Manufacturing gauze or cotton wool must start from raw cotton fabric or cotton yarn.
Incentives granted:
- A 3-Year Corporate Income Tax Exemption with a Cap (A4)
- Exemption of Import Duties on Machinery
- Exemption of Import Duties on Raw Materials Used in R&D
- Exemption of Import Duties on Raw Materials Used in Production for Export
- Non-tax Incentives
Also Read: Thailand Medical Device Import License Regulations
4) Manufacture of medical device parts
It includes incentives for business applicants manufacturing medical device parts under the following eligibility conditions.
Eligibility: The project must be certified by a medical device international standard, such as ISO 13485 or an equivalent international standard. The certification must be completed before the full operation deadline.
Incentives granted:
- A 3-Year Corporate Income Tax Exemption with a Cap (A4)
- Exemption of Import Duties on Machinery
- Exemption of Import Duties on Raw Materials Used in R&D
- Exemption of Import Duties on Raw Materials Used in Production for Export
- Non-tax Incentives
Also Read: Thai FDA Medical Device Regulatory Guidelines
How to apply for the BOI Investment Promotion?
The BOI Investment Promotion application must be submitted through the e-Investment Promotion system via the website. The Board of Investment is no longer accepting paper applications for investment promotion in the office starting from January 2, 2020.
However, the following applications can still be submitted in paper format:
- Applications for investment promotion to improve production efficiency
- Applications for investment promotion to acquire existing businesses
- Investment promotion measures for community and social development.
How Thai government support the country’s healthcare industry?
In 2023, Thailand’s health economy was estimated to be worth more than 1.4 trillion baht. With the goal to increase the health economy’s value, the government is pushing forward the policies to position Thailand as a Global Health Hub. According to the Global Wellness Institute, Thailand ranks at the 15th position in the world’s top 50 countries in Health and Wellness Tourism.
Thai government and private sector are contributing to support the medical device industry with over $50 million in funding. To meet international standards, this initiative aims to enhance the production of innovative medical products, equipment, and health services to meet international standards. This strategy is a part of the “Medical Hub 2025” plan, which seeks to make Thailand a leading medical hub in the ASEAN region.
Conclusion
Thailand Government offers various incentive benefits to support the pharmaceutical and medical devices industries in growing, providing cost-effective health products, and enabling faster market access to the patients in Thailand.
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FAQs
What tax-based benefits does BOI offer under the Investment Promotion Act?
BOI offers the following tax-based benefits under the Investment Promotion Act:
- Exemption/reduction of import duties on machinery.
- Reduction of import duties for raw or essential materials.
- Exemption of import duties on materials imported for R&D purposes.
- Exemption of corporate income tax on the net profit and dividends derived from the promoted activity.
- A 50 percent reduction in corporate income tax.
- Double deduction from the costs of transportation, electricity, and water supply.
- Additional 25 percent deduction of the cost of installation or construction of facilities.
- Exemption of import duty on raw or essential materials imported for use in production for export.
What are the non-tax incentives granted by BOI?
BOI provides the following non-tax incentives under the Investment Promotion Act:
- Permit for foreign nationals to enter the Kingdom for the purpose of studying investment opportunities.
- Permit to bring into the Kingdom skilled workers and experts to work in investment promoted activities.
- Permit to own land.
- Permit to take out or remit money abroad in foreign currency.
Are there any additional area-based incentives provided by BOI?
Yes, BOI provides area-based incentives for low-income provinces, projects in industrial estates or zones, special economic zones, promoted border provinces in Southern Thailand, the model city project in the Southern border provinces, and the Eastern Economic Corridor (EEC), which consists of Chachoengsao, Chon Buri, and Rayong.
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