Panwa Accounting and Auditing - Thailand ,
Bangkok and Phuket

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BOI – Guideline – How to apply BOI certificate in Thailand

Since Panwa has provided services to our clients to investment in Thailand, the important and essential matter must learn before setting up the company is BOI's incentive. Below are our summarized information on the policy, criteria and incentives:

  1. Policies and Criteria
  2. The Rights and Privileges from BOI
  3. BOI Certificate
A. Policies and Criteria

A1. List of Activities Eligible for Promotion (information as of December 2007)
Section 1: Agriculture and Agricultural Products
Section 2: Mining, Ceramics and Basic Metals
Section 3: Light Industry
Section 4: Metal Products, Machinery and Transport Equipment
Section 5: Electronic Industry and Electric Appliances
Section 6: Chemicals, Paper and Plastics
Section 7: Services and Public Utilities
( More details in  Board of Investment Announcement No. 2 / 2543 )


A2. Criteria for BOI project approval.  Normally, BOI will use 4 criteria for approval of its projects:

  1. Minimum investment is Baht 1 million.
  2. Using modern and advanced technology.
  3. Debt / Equity ratio is more than 3/1.
  4. Added Value is more than 20%.

A3. Procedures for application of BOI Approval

  1. Preparation of application form.
  2. Filling the application form / declare the project details
  3. Approval of the project.

             Approval can be granted according to size of each project as below:

               a. Project size with less than Baht 80 million will be approved by the Office of Board of Investment
                   from 40 – 50 days.
               b. Project size from Baht 80 – 750 million will be approved by the Committee for 60 days.
               c. Project size with over than Baht 750 million will be approved by the Board of Investment and
                   the Prime Minister for 90 days.

  1. Notification of the result of its approval.
  2. Response / Resolution Appeal (In case that was not approved)
  3. Issuance of BOI card.

B. The Rights and Privileges from the BOI

B1. The Related Tax and Non – Tax Rights and Privileges

The Rights and Privileges Related to Tax

Exemption of Corporate Income tax (Section 31, 34 of Investment Promotion ACT B.E.2520 )

Section.31(1)  Exemption of income tax derived from proportion of total investment excluding amount of Land and working capital within 8 years from the date that first income is derived from such activity. ( BOI card issued before 1st December 2001 has no limitation on exemption of income tax)

Section.31 (3)  The income on which the computation of the net profit derived from the activity referred to either paragraph one or two shall include income from the sale of such by-products and semi-manufactured products.

Section.31 (4) In case that the business had loss during the period of receiving exemption of income tax referred to either paragraph one or two, BOI may allow the business to deduct annual loss from the net profit after the expiration of the period of exemption of income tax for the period of not more than 5 years from the expiration date.

Section.34  Dividends derived from BOI business with exemption of income tax referred to Section 31, shall be exempted from computation of taxable income throughout the period.

Exemption of import duties on machinery.(Section.28,29)
Exemption of import duties on raw materials.(Section.30,36)

The Rights and Privileges Not Related to Tax (Non-Tax)
Rights granted with unlimited time and equal zones to the following:
- Import of foreign skilled craftsman (Section.24,25,26)
- Ownership of land (Section 37)
- Remittance of money out of Thailand (Section 37)


B2. Criteria of Using The Rights and Privileges:
       By location or factory zone 3>2>1
       By category of Industry
       By special measures

Specific Project Guidelines:
- Criteria for Shareholders 
      a).Thai shares must not be less than 51% for the following businesses:
        - Agriculture, livestock and fishery
        - Survey and ore mining
        - Business services referred to the account 1 at the end of the Foreign Business Act 2542.
     b). Industrial businesses allow foreigner for majority shareholding or to hold majority of shares.

- Location or factory zone
Can set the factory in every zone except for the following businesses that have to set up in industrial zone:  tan leather, fabric products, and frozen products, repair parts of car, electrical equipment and recycling business.

- ISO Condition
Project with investment starting 10 million baht (not including cost of land and working capital) have to get the certificate of ISO 9000 standard or other equivalent international standards within 2 years from the starting date of business operation.

If cannot follow the above condition, the rights for exemption of corporate income tax will be cancelled for 1 year (last year).


B3  Start - End of Rights and Privileges
Corporate Income Tax: From the date that the first income is incurred
Import duty on machinery: Within the period detailed in the BOI card but can still continue when the BOI card is expired until notification to close the business.
Import duty on raw materials:Within the period detailed in the BOI card from the date of first import.


C.   Main points of BOI card

C1  Card number  XXXXXX(2)/2552.  Each card has a set number entered under the code in “(  )”  which means

(2)       Must file a request for permission of rights but not specify the tax value.
(3)       Must file a request to use the rights with tax value specified.
(3-7)   Other special measures (Agriculture  STL, SMEs, HDD, Software)
(8-9)    Allowed for special measures and not specify the tax value.
/Ν/        Business projects are transferred
Initial with 7     Migration Project (Not originally fromBOI )
7&/Β/                 Migration Project (Originally from BOI ) 
/Γ/                      Projects with BOI card

C2.  The Rights and Privileges
C3.  General Conditions
C4.  Specific Terms
C5.  Editing Rights and Benefits Items


Remark   Tips of BOI

  1. Use of rights      can be able to get in every application
  2. Conditions         must report on time and condition
  3. BOI card            Representation of the agreement with details of rights and conditions to do.


Remark:

  1. Must prepare the Feasibility Study to present.
  2. Agriculture, Agricultural Products, Livestock, Fishery, Mining and others, under Annex 1 of Foreign Business Act B.E. 2542 (1999) must have Thai-owned shares at least 51% of share capital.
 
Audit Program on Compliance with the Condition of Promotion Certificate (Issued by the Office of Board of Investment Committee)

 

Company………………………………………………..
Audit Program on Compliance with the Condition of Promotion Certificate
Issued by the Office of Board of Investment Committee

Objectives of the Audit Program

1) To have actual investment in machinery of each Promotion Certificate as approved by the Board of Investment

2) To have quantity of production and sales in compliance with the condition of each Promotion Certificate


Audit Program

Reference

Done By

Date

1) Request Promotion Certificate and understand the details of the condition, Rights and Benefits obtained from the promotion of investment of each Promotion Certificate.

Investment in Machinery
2) Request details of machinery including the summarized movement of each Promotion Certificate showing beginning forward, increase, decrease and carry forward.

    2.1 Check the beginning forward in details of machinery with the carry forward in the same details of the previous year (in case the audit is continued from the previous year).
2.2 Check the additional purchase items of machinery in the period with the documents of purchasing and payment such as Delivery Note/Packing list, Import Customs Clearance, Letter of Credit, Trust receipt, Debit Note from Bank, Bank Statement, and Receipts.
2.3 Check the details of additional machinery purchased during the period with the condition of each Promotion Certificate such as capacity of production, due of machinery importation.
2.4 Request location map of machinery and perform physical count of the machinery purchased during the period and check whether number of machinery matched with the document of purchase and import.   
2.5 Compare the details of additional investment in machinery with the details in application form for Enjoying Corporate Income Tax Exemption.

Quantity of Production
3) Request details of quantity of production (unit) of each machine separately by each Promotion Certificate as follows:

  • Daily quantity of production
  • Monthly quantity of production
  • Annual quantity of production

 

 

 

     3.1 Test the reliability of above details with the sources of data such as daily production report of production department and the stock card.
3.2 Compare the capacity of production of each Promotion Certificate with the actual annual quantity of production.
3.3 Compare the capacity of production of each Promotion Certificate and quantity of production as mentioned in 3.2 with the details in application form for Enjoying Corporate Income Tax Exemption.

Quantity and Value of Sales
4) Request details of quantity and value of sales separately by each Promotion Certificate as follows:

  • Daily quantity and value of sales
  • Monthly quantity and value of sales
  • Annual quantity and value of sales

     4.1 Test the reliability of above details by checking with sales documents such as invoice, delivery order etc., and with records of sales, and trace to the out-movement in stock card. In case of returned goods, check the documents of returned goods with records of returned goods and in-movement in stock card.
4.2 Compare the annual quantity of sale shown in the details with the condition under Promotion Certificate to ensure that quantity of sales does not exceed the quantity under the condition.
4.3 Compare the quantity and value of sales from above details with the details in application form for Enjoying Corporate Income Tax Exemption.

Scope of test
Checking Sales Documents:

  • In case of having 1 or 2 Promotion Certificates, at least 20 transactions (Invoice) per Promotion Certificate shall be checked.
  • In case of having 3 or more Promotion Certificates, at least 50 transactions (Invoice) in total, with all Promotion Certificates and equal number of transactions each, shall be checked.

5) Review the minutes of the Shareholders’ meeting, board of management and other board of directors to consider any matter significant to the above audit.

6)  Other audit Procedure

 

 

 

 

 

Auditor Report on Compaliance with the Condition of BOI Promotion Certificate

 

Auditor Report on Compliance
with the Condition of BOI Promotion Certificate

To        Board of Directors
            ………………………………………..

We have audited the information in the application form for Enjoying Corporate Income Tax Exemption of the entity under BOI promotion related to investment value on increase in machinery, quantity of production and quantity and value of sales used for enjoying corporate income tax exemption of …………………………………….. for the period ending ………………………… This audit has been conducted in accordance with the agreed-upon procedures as prescribed by the Office of the Board of Investment as attached herewith.

We have conducted the audit in accordance with the auditing standards related to the agreed-upon procedures. The purpose of such procedures is to assist the Office of the Board of Investment in approval of application form for Enjoying Corporate Income Tax Exemption.

We would like to report the fact found from our audit as follows:

Investment in Machinery

  1. Refer to Audit program item 2.2, we found that the increase in purchase of machinery during the period and the supporting documents for purchase and payment were:

?   Agreed each other
?   Not agreed because: ________________________________

  1. Refer to Audit Program item 2.3, we found that the details of increase in purchased machinery during the period and the condition of each Promotion Certificate were:

?   Agreed each other
?   Not agreed because: ________________________________

  1. Refer to Audit Program item 2.4, we found that the machinery purchased during the period actually existed and when checked with the purchase and import documents, they were:

?   Agreed each other
?   Not agreed because: ________________________________

  1. Refer to Audit Program item 2.5, we found that the details of increase in investment of machinery and the details in application form for Enjoying Corporate Income Tax Exemption were:

?   Agreed each other
?   Not agreed because: ________________________________

Quantity of Production

  1. Refer to Audit Program item 3.1, we found that the details of quantity of production and the source of information were:

?   Agreed each other
?   Not agreed because: ________________________________

 

       6.  Refer to Audit Program item 3.2, we found that actual annual quantity of production

?  Not exceeding capacity under Promotion Certificate
?  Exceeding capacity under Promotion Certificate as below:          __________________                .

  1. Refer to Audit Program item 3.3, we found that capacity under promotion certificate and actual quantity of production, and details in application form for Enjoying Corporate Income Tax Exemption were:

?   Agreed each other
?   Not agreed because: ________________________________

Quantity and Value of Sales

  1. Refer to Audit Program item 4.1, we found that the details of quantity and value of sales, and sales documents, sales account and stock card were:

?   Agreed each other
?   Not agreed because: ________________________________

  1. Refer to Audit Program item 4.2, we found that the annual quantity of sales.

?  Not exceeding capacity under Promotion Certificate
?  Exceeding capacity under Promotion Certificate as below:                 ________________________         .

  1. Refer to Audit Program item 4.3, we found that the quantity and value of sales, and details in the application form for Enjoying Corporate Income Tax Exemption.

?   Agreed each other
?   Not agreed because: ________________________________

Since the above audit was not conducted in accordance with the Generally Accepted Auditing Standards, we are not able to provide assurance to the information in application form for Enjoying Corporate Income Tax Exemption for the period from ………………. to ………………………..

Had we been able to perform further procedures or audit the financial statements in accordance with the Generally Accepted Auditing Standards, we might have found other matter to be presented in this report.

This report was prepared for the objective as mentioned in the first paragraph and for use as your information, and was not prepared for other objective or disclosed to other party.

This report was concerned with the above-mentioned aspects, and not extended to the financial statements of ………………………………..

 

 

Sign …………………………………
(…………………………………..)
Certified Public Accountant No. …………..

Date…………………………..

 

For more information, please feel free to contact us:
Phone Nos.:
+66 2933 6121, +66 2933 6122, +66 2933 5601
(for call inside Thailand use 0 instead of +66)
Fax:
+66 2933 6120
Email
: mgr@panwa.co.th
Please CC: to our alternate email: panwagroup@gmail.com

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