“Merit Based Incentives” are privileges that the Board of Investment (‘BOI’) will consider granting for investors to encourage enhanced competitiveness. Merit based incentives include extended tax holidays (although no longer than 8 years in total), additional corporate income tax exemptions and additional deductions on certain expenditure.
Keywords: Mazars, Thailand, Legal, BOI, Corporate Income Tax Exemption, Merit Based Incentives
25 March 2015
Applicants shall start by checking the eligible activities under the new BOI scheme and whether they fall under activity Group A or Group B.
For Group A activities, there are 2 options:
a) Companies that are promoted by the BOI with remaining corporate income tax exemptions can submit an application to receive additional rights and privileges from merit based activities; or
b) Submit an application for merit based incentives together with the application for investment promotion.
For Group B activities:
The application to receive additional rights and privileges from Merit-based activities must be submitted with the application for investment promotion ONLY.
The list of eligible activities and incentives in Thai can be found here and in English here.
Project amendment is required
In case the BOI approves the application and grants additional rights and privileges from merit based activities, the promoted company should submit an application to amend the existing project when there are substantial amendments to the existing approved projects, e.g. change in the amount of corporate income tax exempted, change of scope of business, etc.
Calculating the amount of corporate income tax exempted
For Group A activities:
The additional amount of corporate income tax exempted is calculated on the amount of investment or expenditure incurred from the date of the submission of the merit based application through to the end of the corporate income tax exemption privilege.
For Group B activities:
The additional amount of corporate income tax exemption shall be calculated from the investment or expenditure incurred within three years from the date of the submission of the merit based application.
If the promoted company receives the maximum tax holiday (8 years), the merit based incentive does not prolong the period of tax holiday.
If the promoted company receives an 8 year tax holiday and an uncapped amount of corporate income tax exempted, the company may receive a 50% reduction of corporate income tax for another 5 years, double deductions on the costs of transportation, electricity and water supply for 10 years and enhanced capital allowances.
The BOI released an explanatory note on 28 January 2015 to provide further clarity on the application to receive additional rights and privileges from merit based activities can be found here and in English here.