Thailand has tremendous potential for "green growth". Thanks to newly introduced tax incentives, a company can now look to maximise shareholder return, reducing costs of production by acquiring more efficient equipment, paid for largely by tax savings.

The Board of Investment (BoI) grants both tax and non-tax incentives for new investments in Thailand. Income-tax incentives (or "tax holidays") have traditionally been granted to new investments in less economically developed areas or in national "priority sectors".

The BOI has now extended corporate income-tax incentives to expired projects, with reductions of up to 70 per cent of the cost of investment by existing plants in new machinery that saves energy, uses alternative fuel sources, or reduces pollution in the production process. These incentives may be used over three years.

The requirements to qualify for the new incentives are not onerous. There is no minimum investment. Simply replacing existing equipment with new could qualify.

Take, for example, a company installing new boilers to replace existing ageing equipment in its production line at a cost of Bt10 million. Typically, new-generation boilers come equipped with technology to reduce the energy needed to fuel them. If the company can demonstrate that these newly acquired assets use less electricity than the boilers being replaced, or use alternative fuel sources (ie, non-fossil fuel), or reduce pollution, the acquisition should qualify for the incentives.

Hence, if the new boilers costing Bt10 million can reduce the energy bill by Bt3 million a year, the company can benefit from a corporate income tax exemption of up to Bt7 million (70% of Bt10 million) over a period of three years. The new boilers could, if imported, also qualify for customs-duty exemptions.

Though boilers may not be used in your industry, motors are a common component in most industrial machinery. Motors account for over 60 per cent of electricity used, so taking a look at the energy-efficiency of the motors used in your production line could open the doors for savings not only in energy bills but also your tax bill.

It is encouraging that these incentives are available to industry categories that would not normally be eligible for them under the BOI scheme. However, they are restricted to "manufacturing" industries and industry categories on the list of those promoted by the BOI.

The deadline for application is currently December 31, but the deadline for the purchase of qualifying machinery is December 2011. The basic data needed to complete the application should be available from your plant or factory manager. Be sure to include the electricity savings as well as any use of alternative-energy sources to replace fossil energy and/or reduction in discharge of pollutants.

These incentives are win-win: the environment benefits, and shareholders' return is maximised.

This article has looked at only one of the incentives introduced by the BOI in its "Thailand Investment Year Package". We advise careful study of the details to determine what steps are needed to amend the structure of your company, or particular transactions, to maximise the BOI incentives.

"How Best to Utilise your BOI Incentives" is one of the break-out sessions offered in PricewaterhouseCoopers' 11th annual Tax and Legal conference, "Redefining Success: Managing Tax through Turbulent Times - Maximise Shareholder Value through Effective Tax Planning 2010" taking place in Bangkok on November 12.