When a Thai group wants one technical team for the region
S., a Thai conglomerate, runs three factories in Vietnam (Binh Duong, Bac Ninh, Hai Phong) and two in Indonesia. Each plant keeps its own technical crew, with duplicated cost and uneven support quality. Management has decided to set up a centralised technical support centre in Thailand serving all regional plants. The question: under what form should the centre be established to capture incentives while fitting how a Thai enterprise actually operates?
1. The IBC: a regime tailored for regional service centres
Thailand has replaced the old Regional Operating Headquarters and International Headquarters regimes with the International Business Centre (IBC). This is precisely the legal framework for centres providing support services to associated companies, and technical support sits within the qualifying activity list.
Tax incentives administered by the Thai Revenue Department for IBCs:
- Corporate income tax of 8%, 5% or 3% on income from support services, treasury services and royalties, depending on expenditure incurred in Thailand: from THB 60 million a year for 8%, THB 300 million for 5%, THB 600 million for 3%, against the standard 20% rate.
- Exemption on dividends received from associated enterprises inside and outside Thailand.
- Withholding tax exemption on dividends paid to a foreign parent and on interest paid abroad.
- Flat 15% personal income tax for foreign specialists working at the IBC, well below standard progressive rates.
Non-tax incentives granted by the BOI: 100% foreign ownership, land ownership rights for the project, fast-track visas and work permits through the one-stop centre, and import duty exemption on machinery for R&D and training.
2. Conditions: registration alone is not enough
IBC recognition requires meeting capital conditions (minimum investment, paid-up capital) and a minimum number of skilled employees, while actual Thai expenditure must reach the threshold matching the desired tax rate. The centre must commence operations and generate income within the prescribed period after the BOI certificate is issued. In other words, the IBC rewards genuine spending and hiring commitments in Thailand, not a shell entity.
3. Thai enterprise specifics: three points to plan for
First, the BOI process. Thai BOI applications demand thorough preparation, and certified companies must maintain periodic compliance reporting. Thai enterprises typically keep a dedicated BOI liaison team; groups without one should build it from the start rather than outsourcing everything.
Second, language and operating culture. A support centre serving Vietnamese plants needs Thai-Vietnamese bilingual staff or at least fluent technical English. Thai corporate culture values hierarchy and internal consensus, so the request-intake process from the plants should be clearly designed rather than left to personal relationships.
Third, time zones and physical presence. Thailand and Vietnam share the same time zone, a natural advantage for live technical support. Even so, serious plant incidents still require a mechanism to dispatch specialists on site within the committed SLA, and that travel cost must be priced into the internal service model.
4. The reverse flow: Thai centre billing Vietnamese companies
A Thai centre charging service fees to Vietnamese subsidiaries triggers two points to watch. First, foreign contractor tax in Vietnam on service income: the corporate income tax portion for foreign contractors is now governed by Corporate Income Tax Law No. 67/2025/QH15 with Decree 320/2025/ND-CP and Circular 20/2026/TT-BTC, after the CIT provisions for foreign contractors in Circular 103/2014/TT-BTC were repealed from 12 March 2026. Second, permanent establishment risk in Vietnam if the centre’s activity exceeds ordinary cross-border services. Both must be designed into the intra-group service agreement and the group’s transfer pricing policy from the outset.
Conclusion
For group S., Thailand’s IBC fits: technical support is a qualifying activity, the 8%/5%/3% rates attach to genuine spending commitments, and non-tax incentives solve the foreign-talent pain points. The precondition is a real engineering team in Thailand and disciplined BOI compliance, plus a service-fee flow into Vietnam structured for current contractor-tax rules and PE risk management.
Frequently asked questions
Does a centre serving only group affiliates qualify as an IBC?
Yes. The IBC is designed precisely for providing services to associated companies within the same group, including business management, technical support, R&D and training, provided the capital, headcount and Thai-expenditure thresholds are met.
Does the 3% rate apply to all of the centre’s income?
No. The concessionary rate applies only to income from qualifying activities such as support services, treasury services and royalties from technology developed in Thailand. International trading income falls outside the incentive scope.
Can Vietnamese specialists working at the Thai centre get the 15% rate?
The flat 15% rate applies to foreign employees of the IBC who meet the conditions, regardless of nationality. Companies should verify the specific role and working-time conditions under Thai Revenue Department rules.
Are technical service fees charged by the Thai centre to Vietnamese companies taxable in Vietnam?
They may be subject to foreign contractor tax in Vietnam. The rate and mechanics depend on the nature of the services and current rules, with the CIT portion now under CIT Law 67/2025, Decree 320/2025 and Circular 20/2026. Each service contract needs individual review.
FLAT Law Firm supports Thai enterprises
Setting up a cross-border technical support centre requires simultaneous command of Thailand’s IBC and BOI regimes and Vietnam-side tax obligations. FLAT Law Firm helps Thai groups design the centre structure, draft intra-group service agreements and build transfer pricing policies compliant with both countries’ rules.
This article has been quality-reviewed by the FLAW AI Legal Council
