On 16 May 2016, the Thailand Supreme Court delivered its judgment on Case No 15345/2558 dismissing a BOI-promoted company's appeal against assessments of tax it received from the Thailand Revenue Department.

The judgment affirms that even though the Investment Promotion Act prescribes exemption from tax for Board of Investment promoted projects, this prescription does not override the law under the Revenue Code concerning the method of tax computation for companies with BOI promoted projects, and the Revenue Dept's Notification and Board of Taxation's Ruling (as summarized below) prevail.

The Revenue Department's Notification

Back in 1987, Thailand's Revenue Dept 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's tax computations.

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. the profit/loss for the one entity) shall be the company's profit/loss that the Revenue Code refers to.

Thus, for a company with BOI-promoted projects, the Revenue Dept's Notification requires the company to compute its (one entity) tax by:

1. Combining the profits/losses of BOI-promoted projects with those of non-BOI businesses to arrive at a total combined profit/loss for the entity;
2. Calculate the corporate tax payable on the total combined profit/loss;
3. Apportion the corporate tax payable to the BOI-promoted projects and the non-BOI businesses; and then
4. Subtract the corporate tax payable on the BOI-promoted projects from the corporate tax payable on the total combined profit/loss, which amount is then the corporate tax payable by the entity.

The Board of Taxation's Ruling

Whilst for 20 years the Revenue Dept didn't enforce its above Notification (due to the Council of State's opinion that it was contrary to Section 31 of the Investment Promotion Act), in 2008, the Revenue Department referred the issue to the Board of Taxation, which issued its Ruling No 38 dated 13 February 2552 saying that:

• As the Revenue Code prescribes corporate tax applies to a company (as a one single entity); then
• A company must combine the profits/losses from BOI-promoted projects with those from the non-BOI businesses (i.e. agreeing with the Revenue Department).

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