Many foreign investors are attracted to Thailand because of the incentives offered by the Thailand Board of Investment (BOI).
While most businesses focus on the tax benefits, BOI promotion also creates additional accounting, reporting, and compliance requirements that must be managed correctly.
Understanding the differences between BOI and Non-BOI companies is essential to avoid compliance issues and maximize available benefits.
What is a BOI Company?
A BOI company is a business that has received investment promotion from the Board of Investment for qualifying activities and industries. Depending on the promoted activity, benefits may include:
- Corporate Income Tax exemptions
- Import duty exemptions on machinery
- Import duty exemptions on raw materials
- Easier employment of foreign specialists
- Enhanced foreign ownership rights
- Land ownership rights for promoted activities
However, these benefits come with additional compliance obligations.
Accounting Differences Between BOI and Non-BOI Companies?
- 1.Separate Accounting records
One of the most important requirements for BOI-promoted companies is the maintenance of clear accounting records for promoted activities. If a company operates both:
- BOI-promoted activities; and
- Non-promoted activities
It must maintain accounting records that clearly distinguish between the two. Failure to properly separate revenues and expenses can result in challenges during BOI audits!
2. Revenue and Expense Allocation
BOI companies must be able to demonstrate how costs and revenues are allocated between promoted and non-promoted operations.
Examples include:
- Employee salaries
- Rent and facility costs
- Administrative expenses
- Shared operational costs
3. Additional Reporting Requirements
Unlike ordinary companies, BOI-promoted entities are required to submit periodic reports to the BOI. These reports often include:
- Progress reports
- Operational performance reports
- Investment utilization reports
- Employment information
- Machinery utilization information
4. Corporate Income Tax Monitoring
Many BOI companies enjoy temporary Corporate Income Tax exemptions. During the incentive period, companies must carefully monitor:
- BOI-eligible income
- Non-BOI income
- Tax exempt profits
- Taxable profits
5. Fixed Asset Tracking
BOI-promoted machinery and equipment often receive duty exemptions. As a result, companies should maintain:
- Detailed fixed asset registers
- Asset location records
- Purchase documentation
- Import documentation
What About Non-BOI Companies?
Non-BOI companies generally face simpler compliance requirements. They are primarily responsible for:
- Monthly tax filings
- VAT submissions
- Withholding tax filings
- Annual financial statements
- Statutory audits
- Corporate income tax filings
Although compliance remains important, there are generally fewer reporting requirements than for BOI-promoted companies.
Common Mistakes We See and where M&E (Thailand) can help you
- Mixing BOI and non-BOI expenses
- Inadequate supporting documentation
- Failure to maintain separate accounting records
- Incorrect revenue allocation
- Missing BOI reporting deadlines