|
|
|
Paul Gambles,
Director MBMG
Investment Advisory |
|
BoI’s schemes change along with its priorities
For a number of years there have been plans at the Board
of Investment (BoI) to change its criteria for the kind of business it
wishes to assist.
This June the BoI presented its proposals to the foreign business community
after originally consulting with it and the Thai business community back in
September 2013. Since then, the BoI has confirmed that the new scheme will
come into effect on 1st January 2015.
Important changes
The changes are quite significant, as some sectors which
benefitted from the BoI’s initiative will no longer qualify. Broadly
speaking, these include sectors which have low added-value,
labour-intensive, low-tech and/or use uncomplicated production processes.
In fact, businesses will no longer qualify for incentives purely based on
the sector in which they work. Companies operating in favoured sectors will
receive lower basic tax rates; but those who also meet criteria in areas
such as R&D, advanced technology, design and development of local suppliers,
will enjoy additional incentives.
Additionally, zone-based incentives will be abolished, to be replaced by the
promotion of sector-specific industrial clusters in each region. This will
mean in essence that there will no longer be any difference between Bangkok
and the Eastern Seaboard. However, Zone 3 incentives will more or less
remain intact, minus one or two exceptions.
The BoI will no longer only concentrate its support of inbound investment -
it will begin to actively promote outward investment by Thai-based firms.
Although, how it proposes to do this has yet to be clarified.
How will it affect foreign business in Thailand?
As the new sector and merit criteria have yet to be finalised, it
is still unclear as to the precise categories under which incentives will be
awarded.
Businesses which have already been approved under the old BoI scheme will
not be affected for the duration of their contract, even if that is beyond
1st January 2015.
Any new projects which are submitted before 31st December 2014 fall under
the old scheme - the submission date is the official validity date, not the
date of approval. The same applies to any extensions of existing projects
submitted before the end of 2014.
For any new project submitted on or after 1st January 2015, the new scheme
will apply. Also, if the submission for an extension of an existing project
is submitted on or after 1st January, the new scheme will apply.
New emphasis
Whilst details are still sketchy, it appears that there is an
emphasis on innovative and hi-tech activity. It appears that the days of BoI
benefits for low-tech companies, such as food and drink producers, are
numbered. Today around 240 types of business receive incentives and it seems
that up to 40 will lose support altogether. Others, meanwhile, may only
receive tax incentives.
Furthermore, there promises to be measures to increase competitiveness
amongst small and medium-sized businesses (SME’s). This is much needed and
will include an extension of the SME incentive scheme by three years from
this year. The incentives will be given to SMEs in 35 selected sectors.
One thing the BoI hasn’t mentioned to date is how these changes will take
into account and be affected by the inception of the ASEAN Economic
Community at the end of next year.
What to do
Of course such major changes will involve initial confusion and a
need to grasp exactly how the new scheme’s rules are interpreted in
practice. For that reason, if you run a company, or intend to set up, a
company under the BoI scheme, it’s best to ask an advisor.
Please Note: While
every effort has been made to ensure that the information
contained herein is correct, MBMG Group cannot be held
responsible for any errors that may occur. The views of the
contributors may not necessarily reflect the house view of MBMG
Group. Views and opinions expressed herein may change with
market conditions and should not be used in isolation.
MBMG Group is an advisory firm that assists expatriates and
locals within the South East Asia Region with services ranging
from Investment Advisory, Personal Advisory, Tax Advisory,
Private Equity Services, Corporate Services, Insurance Services,
Accounting & Auditing Services, Legal Services, Estate Planning
and Property Solutions. For more information: Tel: +66 2665
2536; e-mail: [email protected]; Linkedin: MBMG Group;
Twitter: @MBMGIntl; Facebook: /MBMGGroup |
|
|
|
|
|
|
|
|