Thailand BOI Project Corporate Tax Exemptions
Update | May 2016
On 16 May 2016, the Thailand Supreme Court read its judgment on Case No 15345/2558, dismissing a BOI-promoted company's arguments against assessments of tax it received from the Revenue Department and agreeing with the Revenue Department's arguments.
This Supreme Court ruling affirms that whilst the Investment Promotion Act prescribes an exemption from tax for Board of Investment promoted projects, the Investment Promotion Act prescription does not override the Revenue Code's law for the method of computation of tax for companies with BOI promoted projects and therefore the Revenue Department's Notification and the Board of Taxation's Ruling (as described in the below Tax Advantage Article) prevail.
Tax Insight | September 2009
Back in 1987, Thailand's Revenue Department issued Notification dated 5 February 2530 prescribing that the 'one entity concept' shall apply to Board of Investment (BOI) promoted projects for the purpose of a company computing its corporate tax exemptions for its BOI-promoted projects.
That is, in the case of a company having a BOI-promoted project, the company is required to combine the profits/losses of all its BOI projects with those of its non-BOI businesses, which combined profit/loss (i.e. profit/loss for the one entity) shall be the profit/loss for the purpose of computing corporate income tax exemptions for the BOI projects.
But for 20 years, the Revenue Dept didn't enforce this Notification, because shortly after its issue, the BOI referred the matter to the Council of State, which issued the opinion that the Notification was contrary to the prescription in Section 31 of the Investment Promotion Act, which prescribes exemption from corporate tax for each individual BOI-promoted project.
Not resting on the matter however, in 2008 the Revenue Department referred it to the Board of Taxation, which issued Ruling No 38 dated 13 February 2552 saying that as the Revenue Code subjects a company to corporate income tax as a single entity, then a company must combine all its profits/losses from its BOI-promoted projects with the profits/losses from its non-BOI businesses (i.e. agreeing with the Revenue Department's position).
And whilst shortly thereafter, the BOI again referred the matter to the Council of State, which again issued its opinion in favor of the BOI, this time, with the Board of Taxation's backing, the Revenue Department started to enforce its Notification.
If you are a company with a BOI-promoted project, Sherrings should like you to note that the Council of State's opinion cannot be used to mitigate any corporate income tax liability that may be imposed by the Revenue Department under its Notification dated 5 February 2520.
That Notification requires a company with a BOI-promoted project to compute tax by:
This is a general information Tax Insight Article only. It should not be used to determine any matter without consulting with an experienced Thailand tax advisor.