If you are a foreign company setting up manufacturing or 3PL operations in Thailand in 2026, three terms come up in every consultant meeting: BOI promotion, Free Zone, and IEAT zone. Each is a different tool with different rules. The wrong choice can cost you 5-15% of your operating economics over 5 years.
This is the practical guide we wish existed when our Korean, Japanese and Chinese tenants were first making this decision.
What each one actually is
BOI promotion — a tax incentive scheme tied to your project
BOI (Board of Investment) promotion is a Thai government incentive granted to specific qualifying projects. Once granted, your company gets corporate tax exemption (3-8 years depending on activity), import duty exemption on machinery, and various non-tax benefits like visa fast-track and 100% foreign ownership allowance.
BOI is NOT a location. You can have BOI promotion anywhere in Thailand. The promotion attaches to your company and project, not the building.
Free Zone — a customs-bonded area
A Free Zone (FZ) is a designated geographic area where goods can enter with import duty and VAT deferred until they leave the zone. If goods are re-exported, you never pay Thai duty/VAT at all.
Free Zones are physical locations. You can be in a Free Zone OR have BOI promotion OR both. The best foreign manufacturer setups often stack BOI + Free Zone.
IEAT zone — an industrial estate run by the IEAT authority
IEAT (Industrial Estate Authority of Thailand) operates several industrial estates. Locating inside an IEAT estate bundles infrastructure (water, power, security, permits, sometimes BOI partnership) for a higher rent.
Famous IEAT estates include Amata City Chonburi, Hemaraj Eastern Seaboard, and Laem Chabang Industrial Estate. WHA Industrial Development also operates under IEAT framework in some locations.
Side-by-side comparison
| Dimension | BOI promotion | Free Zone | IEAT zone |
|---|---|---|---|
| What it is | Tax incentive scheme | Customs-bonded area | Industrial estate |
| Corporate tax | 3-8 year exemption | Standard 20% | Standard 20% |
| Import duty | Machinery exemption | Deferred until exit | Standard |
| VAT | Standard | Deferred until exit | Standard |
| Foreign ownership | 100% allowed | Standard (49% non-BOI) | Standard |
| Best for | New investment | Export >50% | Infrastructure-bundled |
| Setup cost | 200K-800K THB | 30K-80K + bond | Bundled in rent |
| Stackable | Yes (+FZ or IEAT) | Yes (+BOI) | Yes (+BOI) |
The decision shortcut
You export more than 50% of output → Free Zone almost always pays back. Especially if your import duty rates are >5%. The bond cost is recovered fast through duty deferral on inbound machinery and raw materials. You are new capital investment with imported machinery → BOI promotion is a no-brainer if you qualify. Apply BEFORE signing a lease — BOI status grants you 100% foreign ownership and tax exemption, and it changes which lease structures make economic sense. You sell domestically and import little → skip Free Zone, consider BOI, location flexibility wins. A non-IEAT location like Bangna-Trad with a private landlord (lower rent, no CAM) often beats an IEAT estate when you do not need the bundled infrastructure premium. You are a 3PL → bonded warehouse status (separate from FZ) is usually the right tool. Talk to a customs broker before deciding location. Bonded operations can run in many places, including some private warehouses with the right setup.The most expensive mistake we see
Foreign companies sign a lease, then realize months later that BOI promotion or Free Zone status would have completely changed the economics. By then the building is committed and the structure is sub-optimal.
The correct order of operations:
- Decide your tax structure first (BOI, Free Zone, both, or neither)
- Then choose your location based on that decision
- Then sign the lease
Reversing this order is the most expensive mistake we see in foreign manufacturer setup.
Who to consult
For BOI applications: KPMG BOI desk, Mazars, A&M Thailand, Brer Rabbit Legal, LexNova Partners. For Free Zone and customs setup: customs broker firms (Bee Logistics, BKL, or a TIFFA member). We have working relationships with several of these and can introduce you when you are ready.
Where K.T. Thai Property fits
Our Bangna-Trad location is BOI-compatible. For tenants needing designated Free Zone status, we honestly recommend Hemaraj or WHA EEC parks — we are not in a Free Zone and will not pretend otherwise. For BOI-promoted manufacturers and 3PLs who do not need FZ specifically, we are the lower-cost flexible option.
Get the full guide
The EEC Warehouse Cost Benchmark 2026 PDF has the BOI/FZ/IEAT decision framework plus rental rate benchmarks and 5-year TCO scenarios. Download free →