Speed and size: ways to better BOI investment incentives
Since the junta took power, not only has state investment accelerated, so has private investment.
The Board of Investment (BOI) claimed that throughout the year 2015, total value of approved projects was Bt809.38 billion, creating employment opportunities for 183,000 Thai citizens as well as usage of domestic raw materials worth Bt781 million a year. However, those are only figures on paper, as they are just proposed projects approved by the BOI.
Generally, project implementation should be made any time up to a maximum of 36 months from the date of receiving BOI approval, with an option for extension.
Considering the current economic downturn, what Thailand really needs now is actual and rapid investment to boost its economy.
To bring those figures swiftly to fruition and to expedite actual private-sector investment, the BOI on December 15 issued announcement No 11/2558, re an “Investment Acceleration Special Measure”.
Incentives under this measure vary from one to four years of additional corporate-income-tax (CIT) exemption depending on the project’s actual investment value. For example, for building-construction and machinery projects the periods stipulated by the BOI are (1) from November 16, 2015, to June 30, 2016, and (2) from November 16, 2015, to December 31, 2016 respectively.
If the actual investment from November 16, 2015, to June 30, 2016, has reached 70 per cent of the total investment value proposed to the BOI, the project is entitled to an additional CIT exemption of four years and a 50-per-cent CIT reduction for five years. That compares with only three years of additional tax holiday and a 50-per-cent CIT reduction for five years if the actual investment in the same period reached just 50 per cent of the total proposed investment value.
However, in any case, the total CIT exemption period combined must not exceed eight years.
The incentives are available for projects applying for investment promotion between January 1, 2014 and June 30, 2016. This means that in addition to urging investors to speed up the investment in the approved projects before the announcement date (submitted between January 1, 2014, and December 15, 2015), it aims to attract investment from new projects that haven’t yet applied for BOI promotion (submitted between December 15, 2015, and June 30, 2016).
Other than being submitted during the application period, the project must come under BOI activities that entitles it to CIT exemptions and |must commence production or |services and generate the first income by December 31 this year, but not before November 16 of last year.
The BOI initially revealed that more than 1,600 projects were able to qualify for the incentives.
To exercise the privileges under this measure, after fulfilling all those requirements, investors must submit an application exclusively for this measure by June 31, 2018, provided that the CIT exemption period |and amount for the project are still valid.
Veerayut Pornchai, the author, is a senior consultant in legal services at PricewaterhouseCoopers Thailand.
