Thailand BOI Flood Relief Measures

Updated as of January 2012

Here is the summary of the updated flood relief measures implemented by the Board of Investment of Thailand.

Measures to Minimize Business Interruption

1. Factories can be allowed to temporarily relocate elsewhere to continue their production for the period of 6 months from the application submission date. This temporary relocation period can be extended if necessary.
2. Manufacturing process can be allowed to be outsourced partially or wholly on a temporary basis.
3. The BOI, the Ministry of Labor and the Immigration Bureau help facilitate companies to bring in foreign experts and technicians to rehabilitate the factories.

Measures to Reduce Tax Burdens

1. The importation of machinery for replacement is entitled to duty-free. (submission deadline is by the end of June 2012)
2. Raw materials imported damaged by the flooding can be counted as part of the waste allowance without any tax burden.
3. Additional years of corporate income tax exemption are offered to BOI-promoted companies directly affected by the recent flooding that are still during their tax holidays.
4. Industrial estates that invest in flood prevention systems are also offered 8-year tax holidays with the corporate income tax exemption ceiling of 200% of their investment excluding land cost and working capital.

Contact MSNA for your Thailand BOI, accounting and tax questions.

The Board of Investment (BOI) of Thailand has been actively supportive to all of BOI promoted companies in the country particularly to those affected by the flooding. Here is the summary of the recently approved flood relief measures by the BOI of Thailand.

The Thailand BOI approved the following relief measures for flood affected
BOI-promoted companies:

1. Raw materials imported for export production that were completely damaged by the floods can be recognized as losses and are not dutiable.
2. BOI-promoted companies are allowed to subcontract all production by providing imported raw materials for subcontractors to process, on a temporary basis.
3. The measure exempting import duty on machinery acquired to replace machinery
   damaged by flooding (The Board of Investment Announcement No 4/2554, dated 17 January 2011) will be extended for another six months, and so applications to
   import replacement machinery should be submitted to the BOI by 30 June 2012.

These relief measures are subject to conditions and regulations to be announced by
the BOI.

The above mentioned flood relief measures are in addition to the previously
approved relief measures as listed below:

1. Machinery or raw materials are allowed to be relocated from factories in emergency cases.
2. Raw materials imported for export production that were damaged by flooding can be treated as losses, adjusted in the raw materials account and are not dutiable. BOI-promoted companies may use raw materials that are still in good condition in other projects and still be entitled to the import duty exemption.
3. BOI-promoted companies can outsource certain production processes, on a temporary basis to maintain business continuity.
4. The BOI has launched a measure to expedite the visa and work permit process for
   experts brought in to restore projects affected by flooding.

Meanwhile, BOI operators are invited to directly contact the Investment Promotion Bureau that looks after their projects for BOI-assistance, at the following telephone
numbers:

– Investment Promotion Bureau 1 (agricultural and light industries)

02 553 8298 (Khun Sithee Tanboonteck)

– Investment Promotion Bureau 2 (metal, machinery and automotive industries)

02 553 8366 (Khun Anin Meksuksai)

– Investment Promotion Bureau 3 (electronics and electrical appliances industries)

02 533 8167 (Khun Tanavadee Khuvasanont)

– Investment Promotion Bureau 4 (chemicals, papers, plastics, and high value added services)

02 553 8294 (Khun Wuttichai Pisatphen)

The BOI’s operations have been temporarily moved to the One-Start One-Stop
Investment Center (OSOS), 18^th Floor, Chamachuri Square, from 4 November 2011
until further notice. Tel 02 553 8111, 02 209 1100.

Contact MSNA for any questions regarding BOI Thailand.

Board of Investment (BOI) of Thailand is the principal government agency which operates under the Ministry of Industry to encourage investors and facilitate their investments in the country. The BOI is very active in assisting investors in numerous ways such as follows:

1. Enhancing competitiveness and facilitating investment

– Offers an attractive and competitive package of tax incentives.

– Imposes no foreign equity restrictions on manufacturing activities or on some service.

– Provides assistance in the provision of visas and work permits to facilitate entry and subsequent operation for a foreign-owned business.

– Waives restrictions on land ownership by foreign entities.

2. Business support services

– Provides comprehensive information and advice on establishing operations in Thailand.

– Arranges site visits.

– Identifies potential suppliers, subcontractors, joint-venture partners.

– Provides useful contacts with key public and private organizations.

– Coordinates between the foreign business community and other public agencies.

The BOI also acts as Thailand’s marketing arm and actively promotes the country worldwide as one of the best investment locations in Asia. It is tasked
with devising and implementing strategies under which promotional activities
are organized around the globe throughout the year.

The BOI’s seven overseas offices (Tokyo, Osaka, Shanghai, Frankfurt, Paris, Los Angeles and New York) serve as Thailand’s front desks in liaising with potential investors.

Thailand BOI Promotion page gives you information about BOI in Thailand.

In addition to the recently approved flood relief loans by the Thai Cabinet, the
Thailand Board of Investment (BOI) has offered tax relief measures to its
promoted companies operating in Industrial Zone 1, Zone 2 and Zone 3 which were
really affected, might be affected or were not affected by the present flooding.

1. For flood-affected BOI-promoted companies

General measures particularly the corporate income tax (CIT) exemptions/reductions are
being granted to BOI-promoted companies that have been affected by floods and for
those who wish to invest in temporary manufacturing facilities or in new
projects to restore their businesses in Thailand. Such tax relief incentives
for each Industrial Zone are as follows:

Customs duty exemption on imported machinery is also being granted to BOI-promoted
companies in all zones. Companies must submit their applications to the BOI
within the year 2012.

2. For new or existing BOI promoted companies not affected by the floods.

In order to maintain and gain more investors, tax incentives are also being
granted to new or existing BOI-promoted companies not affected by the flooding
and who wish to invest in new projects or expand current investment projects in
Thailand. Such corporate income tax (CIT) exemptions/reductions for each Industrial Zone are as follows:

Exemption on customs duty for imported machinery is also being granted for all zones. Companies must submit their applications to the BOI within the year 2012.

3. For specific businesses affected by the flooding

Automotive manufacturers in all zones are exempted from corporate income tax for 5 years with the tax exemption equal to 100% of investment (excluding land and working capital).

Meanwhile, for “eco car” manufacturers, the current corporate income tax exemption scheme already grants the maximum tax incentives and so there is no change.

For other industries, the BOI board will consider relief measures on a case-by-case basis.

4. For BOI promoted industrial estates/industrial zones operators affected by flooding

The BOI-promoted industrial estates/industrial zones operators wishing to invest in flood prevention infrastructure in the future, whether in current areas or zone extensions, will be granted a corporate income tax exemption equal to 200% of the investment (excluding land and working capital), valid for eight years.

The Board of Investment of Thailand offers a wide range of incentives and services to foreign investors that can help them to make their investments more profitable.

Thailand BOI Promotion provides privileges to attract more and more
investors to set up their operations here in Thailand. The privileges are
summarized as follows:

Tax incentives

• Exemption/reduction of import duties on machinery.(section 28/29)
• Reduction of import duties for raw or essential materials.(section 30)
• Exemption of juristic person’s income tax and dividends.(section 31 and 34)
• A 50 percent reduction of the juristic person’s income tax.(section 35(1))
• Double deductions from the costs of transportation, electricity and water supply.(section 35(2))
• Additional 25 percent deduction of the cost of installation or construction of facilities.(section 35(3))
• Exemption of import duty on raw or essential materials for use in production for export.(section 36)

Non-Tax incentives

• Permit for foreign nationals to enter the Kingdom for the purpose of studying investment opportunities.(section 24)
• Permit to bring into the Kingdom skilled workers and experts to work in investment promoted activities.(section 25 and 26)
• Permit to own land.(section 27)
• Permit to take out or remit money abroad in foreign currency.(section 37)

Guarantees

• The State will not nationalize the activity of the promoted person. (section 43)
• The State will not undertake a new activity in competition with the promoted person’s. (section 44)
• The State will not monopolize the sale of products similar to the promoted person’s.(section 45)
• The State will not impose price controls on the products of the promoted person’s.(section 46)
• The State will grant permission to export at all times.(section 47)
• The State will not allow any government agency, government organization or state enterprise to import any kind of the product being produced by the promoted person into the Kingdom by granting import duty exemption.(section 48)

Protection

• To charge extra import fees into the Kingdom on products similar to those produced by the promoted person at a rate not exceeding 50 percent of the price of overseas insurance and freight charges, effective for a period of not more than one year. (section 49)
• In the case of where the Board is of the opinion that Section 49 is inadequate for protecting the activity of the promoted person. it will increase the measure by banning the import of products similar to the local productions. (section 50)
• In the case where the promoted person encounters any problem or obstacles in the course of carrying out the promoted activity, the Chairman will have the power to render any appropriate assistance.(section 51)

We at MSNA together with our team of BOI experts and auditors can guide you to fully understand how to take full advantage of the BOI incentives, guarantees, protection and privileges. Moreover, we can also help you in complying with the BOI standards particularly in terms of reporting requirements.

Contact MSNA for an expert advice regarding Thailand BOI Promotion.

Thailand BOI promotion process certificate is not that easy to get if you do not have experience of getting BOI promotion or accounting background. Here is how MSNA will make it simple for you to get your Thailand BOI promotion certificate.

1. MSNA will do the hard part of the BOI Promotion process for you. We will work with you closely in preparing the application forms and gathering all the supporting documents. We basically will ask you a lot of questions and fill out the application forms for you. For the forecast and accounting related numbers, we will prepare them and have your approval before we use them in the application.
2. Once we get the application ready, we will submit it to the BOI.
3. Within the next few days, we will confirm with the BOI when we can do the presentation of the project for them. They may need us to submit more documents.
4. Within 40 days (40 days for projects of not more than 80 M Thai Baht, 60 days for 80 – 750 M and 90 days for more than 750 M) after all additional documents are received by the BOI, these will happen:

• The BOI will inform us in writing whether they approved the project within 7 working days from the decision date, detailing the conditions, privileges and benefits granted, if approved. The notification of approval will be sent to us with a form of promotion acceptance for us to fill out.
• Upon receipt of the BOI letter approving the project, we must reply by completing the form of promotion acceptance and sending it back to the BOI within one month. If we want to have any changes or special conditions or privileges, we have to request for it at the time.
• In order to receive the investment promotion certificate, we must set up the new company within six months of accepting the approval, and submit all of the following documents to the BOI (all of which we will arrange for you):
– Application form for promotion certificate
– The memorandum of association
– The certificate of business registration
– A certificate stating the registered capital, a list of directors indicating those empowered to bind the company, and the address of the head office
– A list of the shareholders and their nationalities
– A document showing the transfer of funds from overseas, or a certificate of investment from overseas issued by the Bank of Thailand for foreign investors
– A joint venture contract, licensing agreement, technical assistance contract and/or technology transfer contract (if any)
– Form of utility and manpower requirements.

• The BOI will issue the investment promotion certificate after receipt of all specified documents, and the promoted company must follow the conditions laid out in the Certificate.

Note: You can apply for BOI even if your company has already been set up in Thailand.

Read Thailand BOI Promotion page for the incentives and eligible activities.

Here is information about process to register a limited company in Thailand.

For more information about doing business in Thailand, visit https://www.msnagroup.com/.