New measures for companies impacted by the global minimum tax announced by the Board of Investment of Thailand (“BOI”)

Keywords: Mazars, Thailand, Tax, ฺBOI , Global tax 

3 August 2023

The new measures shall apply to Multinational Enterprises (“MNEs”) for both existing BOI-promoted companies currently enjoying corporate income tax ("CIT") exemption and new BOI applicants, where their consolidated group revenue for the accounting period before applying for BOI incentive meets one of the following criteria. 

• Not less than THB 28,000 million; or 
• Be subject to file Country-by-Country Reporting (“CbCR”) 

An existing BOI-promoted company is required to submit a request for an adjustment of its BOI incentives while the CIT exemption period is valid for at least one year. 

A new BOI applicant must clarify to the BOI upon application submission whether the new BOI applicant desires to (a) obtain CIT exemption with the flexibility to convert to the CIT reduction later or (b) CIT reduction since the beginning.  

The incentive package for the existing BOI-promoted companies and the new BOI applicants is summarized below. 

Existing BOI-promoted companies  

• Upon conversion, the BOI-promoted company is entitled to a 50 percent CIT reduction (i.e., a 10 percent CIT rate) for the period up to two times of the remaining CIT exemption period. However, the additional period and the original CIT reduction period obtained before the conversion shall be limited to ten years. 
• The effective date shall be from the first invoice date issued for the BOI business after obtaining the new BOI certificate. 
• Other incentives granted by the BOI shall remain without changes. 

New BOI applicants 

• The BOI provides an alternative to elect whether the new BOI applicant would like to obtain CIT exemption based on the promoted business with the flexibility to convert to the CIT reduction later, or CIT reduction from the beginning. 
• The CIT reduction period is up to two times of the CIT exemption period; however, capped at ten years.   
• The effective date shall be from the first invoice date after obtaining the BOI certificate. 
• The other incentives granted by the BOI shall remain without changes. 

Our observation 

• MNEs with a BOI certificate or planning to obtain one should make an assessment whether the effective tax rate for the Thai company will be lower than 15% or not. If this is the case, we recommend to review and analyze the impact of the new BOI measures.