Thailand BOI condition of selling and administrative expenses for TISO
One of the businesses promoted by BOI Thailand is trade and investment support offices. Thai Lawyers have helped a lot of foreign clients own their business 100% by obtaining the BOI certificate. This category is for those clients who provide services in advisory, engineering and technical, International business process outsourcing, etc. The main condition for Trade and Investment Support Offices is That the company must spend at least Baht 10 million in selling and administrative expenses per year for as long as it has the BOI promotion. If not, the BOI status will be cancelled.
Regarding the Selling and Administrative expenses, they include office personnel expenses, Electricity, water, internet and telephone expenses, air fares, travelling and accommodation, freight and transportation costs, rents, repair and maintenance, entertainment expense, commission, advertising, sales promotion, interest payments (both domestic and overseas), consultancy service fees, legal fee, accounting fee, audit fee, depreciation of assets and other selling and administrative expenses.
Note that salaries of the people you hire that are the direct cost of providing services to your client are in the category of cost of services (which is not to be counted in the Baht 10M selling and administrative expenses). Salaries of the managing director, secretary, and personnel in the accounting, IT and other administration side of the business are in the category of selling and administrative expenses.
Let MSNA Group help you set up your Thailand BOI company. Contact us today.
How long does it take to set up a BOI company in Thailand?
This question of “how long it take to set up a BOI company in Thailand?” is actually not very relevant to many people. The question we should try to answer is “how soon do you need your BOI company?”. To set up a Thai limited company, it takes about 1 week which includes reserving a name, preparing all the forms, having the directors sign them (which may add days or weeks to the process if the directors are overseas) and filing the forms with the Department of Business Development. However, to set up a BOI company, we have to add months for getting the BOI approval. If your business activity is one which is promoted by the Board of Investment of Thailand, it takes 4 months to a year. The BOI may say that it needs 40 days to approve your project, but that is only in theory. While planning for the timing of things, you should allow 4 months to a year, depending on the business activity, to get the BOI company ready to operate (have bank accounts, hire employees, invoice customers, etc.) So in total, it may take you 4 – 12 months to set up a BOI company in Thailand.
MSNA Group has BOI companies ready for sale. You can start your business right away. Why wait many months to start your business operation when you can start making money now and get the work permits for your foreign employees. You will not have to have 4 Thai employees for each work permit. You will not need a paid up capital of Baht 2M for each expat employee. Buying a ready BOI company is the best and fastest way to set up your business in Thailand.
Talk to us today and start invoicing your clients right away.
Buying a BOI Company – Pros and Cons
Foreigners who want to own their business in Thailand 100% can choose to set up or buy a BOI company. If you decide to set up a new company and get a BOI promotion, most of the time, you will have to go through a long gruesome process for months before you can get your project approved by the Board of Investment. A perfect alternative is buying a BOI company which will allow you to start your business operation right away.
Here are some pros and cons of buying a BOI company:
- You can start hiring you’re your employees right away;
- You can start invoicing your clients and making money immediately (yes, why wait for months before you can start making money?);
- You may take over all the existing clients if the seller agrees;
- In many cases, the company already has accounting in place;
- You can get your work permit and extend your visa processed in a very short time;
- You may take over the employees if the company is in operation;
- If the company has been operating, you may need to hire an accountant to do due diligence to see the financial health of the company;
- You may have to check for pending cases with the Revenue Department, Social Security Office, and the Department of Business Development.
- You have to hire a law firm to check if there is any pending court cases (including the labor court);
- You may want to check if the company has been in compliance with all the BOI conditions;
- If you take over the employees, please note that their length of employment started before you really become their employer. Thus, if you need to let some go later, think about the severance payment rates, which depend on how long they have been hired by the company;
At MSNA Group, we have BOI companies for sale. And we make sure the buyer and the seller get a fair deal. If you are considering buying a BOI company, especially for software business, contact us now.
What is the practice of salary increase in Thailand?
A client who uses payroll outsourcing service of MSNA Group consulted with us on how much to increase the salaries of his employees in Thailand.
Question: Our new Thai company is considering giving salary increase to our employees. We would like your advice on the practice of salary increase in Thailand. What is the average percentage increase in salary in our industry? Maybe there is a different increase for different levels of staff, for example technicians, executives and managers?
Answer: Regarding the practice of salary increase in Thailand, there are companies that give 3 – 10% increase depending on whether they make profits in the previous year. However, from the experience of many clients who use MSNA Group for payroll outsourcing service, we have learned that salary increase by percentages does not work for every employee. Like bonuses, the employers may want to give a less salary increase to the employees that they can replace easily and/or do not perform that well and a bigger salary increase to the employees that they really need and/or perform well (or to the employees that are in high demand and can find another employer so easily).
Contact MSNA Group for payroll outsourcing service and advice on human resource issues.
What is the usual bonus given to employees in Thailand?
One of MSNA’s payroll outsourcing clients asked us about the bonus scheme to be given to employees in Thailand.
Question: Our Thai company is currently still operating at a loss. We are studying into a variable bonus scheme to be given to the employees in Thailand and would like to seek your opinion on this matter. Do you know of any company in our industry or any M&E construction company which pays variable bonuses? If so, what is the average bonus quantum in terms of months? I guess the bonus should be peg to the company profits.
Answer: Regarding bonus scheme, it depends on many factors. For example, companies with western culture usually have a different bonus scheme from the companies with the Thai culture. In many cases, if the monthly salaries are already high, then the number of months for bonus is often lower than if the salaries are low. When you want your company to be an attractive employer, you can pay an attractive salary plus 13th month bonus or you can pay normal salaries plus many months of bonus. Also it depends on the quality of employees. The ones that are very good and can demand higher compensation will stay if the overall remuneration is better than other companies. The ones that are not in high demand will stay even though you do not pay them bonuses. We would suggest having different agreements on the numbers of months for bonus with different employees depending on the levels of performance and the difficulties of finding replacements.
However, if you peg the bonus on company’s profits, it is a non-tax deductible expense. That means all the bonus you pay that is dependent upon the company’s profits will get added back to the bottom line and treated as if it was never an expense of the company for the purpose of calculation of corporate income tax.
Consult MSNA for your questions regarding your doing business in Thailand.
Thailand BOI for Service Business
Getting Thailand BOI for service business is possible, especially if you want to operate a Trade and Investment Support Office (TISO). Your business activities must be one of the following:
2.1 Monitoring and/or servicing associated enterprises including providing or letting office or factory building to company’s associated enterprises
2.2 Advisory services on business operations, except those engaged in buying and selling securities and foreign currency exchange. As for accounting, legal, advertising, architectural and civil engineering businesses, business licenses must be obtained from the Department of Business Development or related government agencies prior to submitting the investment promotion application
2.3 Information services on goods sourcing
2.4 Engineering and technical services, except those related to architecture and civil engineering services
2.5 Business activities related to machinery, engines, tools and equipment, such as:
(1) Importing for wholesaling
(2) Training services
(3) Installation, maintenance and repair
2.6 Wholesaling products manufactured in Thailand
2.7 International business process outsourcing whose services are provided through telecommunication networks, such as administrative services, finance & accounting services, human resource services, sales and marketing services, customer services, data processing, etc.
Because TISO is such a multipurpose category, businesses in a wide variety of fields may qualify for BOI promotion. Although the BOI does not provide any taxation benefits for TISO, the right to own 100% of a TISO company makes it very attractive to foreign service providers and traders who may not be eligible for other investment promotion. Because the requirements are wide-ranging, the BOI has set 10 million baht in annual selling and administrative expenditures as the minimum qualification. This ensures that only companies that will have the greatest impact on Thailand trade and investment qualify.
- Annual selling and administrative expenses must be at least 10 million baht
- Must have a business plan and scope of business as approved by the Board
- No import duty on raw or essential materials used in manufacturing export products for 1 year or more as deemed appropriate by the BOI
- Other non-tax incentives, including getting many work permits for your expat employees
MSNA is available to assist you in numerous ways, including offering consultations and resources.
For complete information, read Thailand BOI information and contact MSNA for consultation on getting Thailand BOI for service business.
BOI for Grading, Packaging and Storage of Plants
Foreigners can own the business 100% if their business is eligible for Thailand BOI. For grading, packaging and storage of plants, vegetables, fruits or flowers, it is possible if your business have one of the following features:
- If your project uses advanced technology (e.g. fruit ripeness sensor, radio frequency pest control, nuclear magnetic resonance) then for this business activity, the BOI benefits that you will get are:
- 8 year corporate income tax exemption, not more than 100% of investment (excluding cost of land and working capital);
- Exemption of import duty on machinery;
- Exemption of import duty on raw or essential materials used in manufacturing export products for 1 year, which can be extended as deemed appropriate by the Board of Investment;
- 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 (meaning many work permits without the ratio of 4 Thais per expat);
- Permit to own land; and
- Permit to take out or remit money abroad in foreign currency.
- Projects that use modern technology (e.g. color sorter, vapor heat treatment to kill fruit fly eggs, seed coating); or
- Project of rice grading (with advanced technology only)
For the business activities in 2 and 3, the BOI benefits that you will get are the same as in 1 above, but the corporate tax exemption is only 5 years and capped at100% of the investment (excluding cost of land and working capital).
Consult with MSNA Group for setting up your BOI promoted business in Thailand.
Thailand BOI for Manufacture of Multi-Purpose Engines and Equipment
If your business receives an investment promotion from Thailand BOI for Manufacture of multi-purpose engines and equipment, you will get the following benefits only if your project has forming process of main engine parts, e.g. cylinder head, crank case, crankshaft, camshaft, connecting rod, piston and flywheel:
- 3 year corporate income tax exemption, capped at 100% of your investment in the project (excluding cost of land and working capital)
- Exemption of import duty on machinery
- Exemption of import duty on raw or essential materials used in manufacturing export products for 1 year, which can be extended as deemed appropriate by the Board of Investment
- Other non-tax incentives, which are many work permits for your foreign skilled workers and experts (without the ratio of 4 Thais per expat), permit to own land; and ability to take out money abroad in foreign currency.
However, if you project is just assembling of multipurpose engine or equipment, you will get the same benefits as mentioned above, except the corporate tax exemption.
Thailand BOI for tourism related businesses
If you are interested in getting Thailand BOI promotion for Amusement Parks, Open Zoos, Hotels, Hostels, Race Tracks, Convention Halls, Exhibition Centers, now is the time. As we all know, Thailand is one of the most visited countries in South East Asia. It only makes sense that many foreign investors think about having a business out of tourism in Thailand.
The government makes a lot of effort in bringing and attracting more tourists all over the world. This opens a lot of opportunities and growth in the tourism related businesses. Thailand Board of Investment is offering both tax and non-tax incentives to foreigners who want to invest in Amusement Parks, Open Zoos, Hotels, Hostels, Race Tracks, Convention Halls and Exhibition Centers in the country. The benefits includes owning land for your business, import duty exemption for machineries, corporate tax exemption, dividend tax exemption, big number of work permits for foreign employees, etc.
Take a look at Thailand BOI promotion for more information and contact Thai lawyers at MSNA Group who are BOI experts and knowledgeable in assisting foreigners to set up their business. Contact us and explore the possibilities of owning your tourism related business 100% without a Thai partner.
Cloud Service Business in Thailand
In a more and more digitalized world, the use of cloud services is in great demand as never before. If you find yourself wishing to bring your cloud services business to Thailand and take advantage of the benefits associated with the BOI promotion, we will be more than happy to assist you in Thailand BOI company registration.
To be qualified for Thailand BOI promotion and to receive the numerous benefits in form of incentives, below are the conditions to meet:
- Must be located in at least 2 data centers in Thailand that are certified with ISO/IEC 27001 (data center).
- Must have connections among all related data centers with speed of at least 10 Gbps for each connection, with backup connections at the same speed.
- Must be certified with ISO/IEC 27001 (cloud security) and ISO/IEC 20000-1 (cloud service).
As a company in the cloud services business, the Thai government acknowledges your importance of activities and categorizes the sector of great significance and value. The incentives under Thailand BOI includes the following.
- 8-year Corporate Income Tax exemption (without cap) + merit based incentives
- Exemption of import duties on machinery
- Exemption of import duties on raw materials for use in production for export
- Non-tax incentives
With a long and multifarious track record in setting up companies for foreigners and the detailed knowledge about Thailand BOI company registration, we are looking forward to giving you advice and helping you to get your company set up here.
Let us assist you to establish your business in Thailand and contact us here.