Tax News Flash Issue 12

Tax News Flash Issue 12

The Investment Promotion Act (No. 4) administered by the Board of Investment (BOI) has recently been issued and amends certain provisions which became effective from 25 January 2017.

1000

Related content

The Investment Promotion Act (No. 4) administered by the Board of Investment (BOI) has recently been issued and amends certain provisions which became effective from 25 January 2017.

The highlights of the amendments relevant to the investment incentives are:

  • Up to 13 years corporate income tax exemption for businesses that utilize high technology and innovation and businesses in research and development.  Tax losses incurred during the tax exemption period may be carried forward and utilized within 5 years after the tax exemption period expires. This amendment is aimed at promoting competitiveness in industries using high technology and innovation or research and development.

    In addition, an import duty exemption will be provided on goods imported to be used in research and development activities, including testing. These amendments are to promote research and development activities.
  • Under the new law, if the BOI is of the opinion that a corporate income tax exemption would be inappropriate for a promoted company, the BOI may grant to the promoted company:

-  A 50% corporate income tax reduction for up to 10 years;
-  The right to claim a tax deduction of no more than 70% of the
   total investment capital within 10 years from the year in which
   revenue is first generated. This is in addition to normal
   depreciation.

This amendment is aimed at encouraging continued investment in Thailand.

  • Dividends paid from a project granted a corporate income tax exemption from the BOI can still be exempt from dividends tax if they are paid within six months after the end of the corporate income tax exemption period.     
  • Taxpayers that received corporate income tax benefits must comply with the Revenue Code in computing their taxable profit or loss.
  • Some privileges provided to certain businesses that manufacture goods for export will be repealed in order to conform to Thailand’s obligations under the World Trade Organization requirements that prohibit export subsidies.
  • The BOI’s power to stipulate conditions in a promotion certificate specifying the amount of local raw materials to be used will also be repealed to conform to Thailand’s obligations under the World Trade Organization requirements that prohibit such specifications.

In addition to the above amendments, it is expected that new legislation may be issued to provide an opportunity to obtain investment privileges for businesses that may not otherwise qualify under the existing prescribed categories of promoted businesses under the Investment Promotion Act. At this stage there is no definite information on the target industries, criteria for qualification, framework for the new legislation or how it will operate. We understand that a committee will be established to spearhead this new initiative. We will update readers on new developments in this regard.

If you are considering making a new investment, it is important to understand how these new rules may apply to your business in order to benefit from tax and non-tax incentives available. If you have applied to the BOI for an investment promotion and your application is currently in progress, it is advisable to liaise with the BOI to ensure that any tax benefits and privileges are maximized under the new rules. KPMG Thailand has a team of dedicated tax and legal experts who have been monitoring these recent developments and liaising with the BOI.  

© 2017 KPMG Phoomchai Tax Ltd., a Thailand limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Connect with us

 

Request for proposal

 

Submit

KPMG's new digital platform

KPMG International has created a state of the art digital platform that enhances your experience, optimized to discover new and related content.