Manufacture of Hard Disk Drive

Since the last decade, Thailand has been the biggest manufacturer of hard disk drives. Thailand offers low cost, literate, high quality labour and national infrastructure that facilitates the export market. The big digital companies are now manufacturing their products in Thailand to take advantages of these benefits. Some of the conditions and incentives that could help you are listed below.

BOI Activity 5.4.6 Manufacture of hard disk drive

Conditions:

– The areal density of hard disk drives must not be less than 2,000 gigabits per square inch.

–  The cost of refurbishment of existing machines shall be regarded as an investment and will be taken into account in the calculation of corporate income tax exemption cap. The original cost of existing machines shall not be regarded as an investment.

 Incentives:

• An exemption of corporate tax for 8 years.
• Exemption of import duties on machinery
• Exemption of import duties on raw materials used in production for export
• 100% foreign ownership
• Permit to own the land
• Permit to bring skilled workers and experts into the Kingdom

Get in touch with us so we can help you set up your BOI Company in Thailand.

Audit for BOI promoted companies

Companies in Thailand need to file their audited financial statements within 1 month after their Annual General Meeting (AGM) of shareholders. An AGM must be held by 4 months after the accounting year-end to approve the financial statements. BOI promoted companies need the statutory audit every year like their non-BOI counterparts.

Moreover, the BOI companies that are granted a corporate income tax exemption right can exercise that right in the year that they have profits only after they have complied with the conditions specific to their promoted projects. In filing for the BOI’s approval to exercise such right, they need a Thai CPA to audit their BOI operation to make sure that they have complied with the all conditions set out by the BOI. This auditor can be a different person from the one that performs the statutory audit for the company.

Filing the statutory audited financial statements must be done for every accounting year even when the company was just set up and the whole fiscal period has not completed 1 year. Fiscal year-end depends on the company’s policy. But once chosen, it cannot be changed without the approval of the Director General of the Revenue Department.

Audit for BOI companies has difference procedures than non-BOI companies. Contact MSNA Group for audit services.

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.

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:

Pros:

• You can start hiring 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 system in place;
• You can get your work permit and visa extension processed in a very short time;
• You may take over the employees if the company is in operation;
• etc.

Cons:

• 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;
• etc.

Ask MSNA Group. We may 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.

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:

1. 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.

2. Projects that use modern technology (e.g. color sorter, vapor heat treatment to kill fruit fly eggs, seed coating); or
3. 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.