Accounting for BOI companies with various sources of incomes
Most people misunderstand and assume that with the BOI status, they can receive incomes from many different sources. We want to explain here that having a BOI promoted company does not always mean you can always do any businesses and earn incomes from different sources. But in case you can (explain down here), you want to read further about accounting for BOI companies with various sources of incomes.
Thailand Foreign Business Law allows foreigners to do certain business activities. For most business activities, if you do not want to have a Thai majority partner, you need to get a permission to operate the business. One way for foreigners to own their business 100% is to get a BOI promotion whose main purpose is to promote investment in the businesses that truly benefit Thailand. The companies with BOI promotion can operate only the business activities that the BOI approved on the BOI certificates.
Now assuming that your company’s major shareholders are Thai, you may still want to get the BOI promotion for the tax benefits; corporate income tax exemption, machinery import duties reduction, etc. The benefits granted by the BOI are only for the business activities approved by the BOI. However, as a Thai company, you will be able to do other business activities too. This is when you have to be careful in your bookkeeping. In doing accounting for BOI companies with various sources of incomes, you need to separate the incomes and expenses into BOI business and non-BOI business. For the expenses that are paid for the whole company (benefiting both BOI and non-BOI businesses), you will have to allocate them using the most reasonable method. If 40% of the office space is used for the BOI business and 60% is for the non-BOI business, then you will allocate rents accordingly. If specific employees only work for your BOI business, then their salaries will be allocated to the BOI business while the other employees’ salaries will go to non-BOI business.
Contact us today to find out if your business is eligible for BOI promotion or if you need help with accounting.