BOI: More incentives under investment laws
The Investment Promotion Act B.E. 2520 (1977) has been amended by the newly announced Investment Promotion Act B.E. 2560 (No. 4) (2017) (the Investment Promotion Act), effective since 25 January 2017. The rationale behind the amendment is to maintain the Investment Promotion Act up-to-date with current economic, technology and investment trends, subject to more specific announcements from the Board of Investment (the BOI), the essential changes are as follows:
1) Article 30/1: The new Investment Promotion Act has broadened the scope of exemption of import duties. The former Investment Promotion Act granted exemption of import duties only for materials used for manufacture for re-export which has now been revised to include materials imported for used domestically in R&D activities and related testing.
2) Article 31/1: The BOI may now grant corporate income tax (CIT) exemption for a period of up to 13 years for certain R&D and advanced technology and innovation activities. Previously, the maximum period of CIT exemption provided by the BOI for various activities was limited to 8 years.
3) Article 31/2: For projects that are neither eligible for the stated CIT exemption nor CIT reduction, the BOI is also empowered to grant privilege so that such project may be permitted to deduct up to 70% of the amount invested in the promoted business from the net profits derived from the promoted business (in addition to deduction of normal depreciation) for a period of up to 10 years in calculation of the CIT to be paid.
4) Article 32: The new Investment Promotion Act also empowers the BOI to grant CIT rate reduction privilege up to 50%, instead of only CIT exemption, for up to 10 years. This will allow some businesses that may not qualify for CIT exemption to get some tax reduction benefit.
5) Article 32/1: The new Investment Promotion Act now clearly prescribes that such calculation shall be done pursuant to the Revenue Code.
6) Article 34: The new Investment Promotion Act extends the tax exemption duration for the payment of dividends derived from the promoted business. The exemption of tax for dividends extends to dividends that are declared within the exemption period and paid within six months from the expiration of such tax exemption period. The previous act only offered this benefit for dividends that were actually paid within the exemption period.
In addition to the amendment to the current Investment Promotion Act, a new investment act, the National Competitiveness Enhancement Act for Target Industries B.E. 2560, has been enacted on 12 February 2017 (the Competitiveness Enhancement Act). is now officially in force.
The aim of this Competitiveness Enhancement Act is to provide additional tools to attract foreign investments in target areas of advanced technology and innovations. The criteria of target industries has to 1) enhance competitiveness of the country, 2) new industry or service which is not currently existing, and 3) industry which uses advance technology or innovation. The Competitiveness Enhancement Act provides various incentives to promote businesses including CIT exemption up to 15 years and other non-tax benefits granted by the BOI under the Investment Promotion Act.
In addition, the Act establishes a Competitiveness Enhancement Fund, starting with Baht 10 billion which has been contributed by the government pursuant to this Act. The fund will be used to fund or subsidize promoted businesses pursuant to the terms and conditions of the Act.
To promote the national e-Payment plan, on March 13, 2017, the DBD issued an Announcement on “Accounting record, Wording and items for account record, Period of account record, and Supporting documents for account record (Issue 3), B.E. 2560,” which requires that all businesses that receive payments from general public whether the payment is in cash or electronic card, shall install Electronic Data Capture (EDC) and shall notify the DBD within 15 days after the installation. EDC is the device that allows merchants to accept and process payment by credit and debit cards. Business operators can obtain EDC machines from banks in Thailand. This Announcement is effective from 31 March 2017 onward.
On May 7, 2017, the Royal Decree according to the Revenue Code on tax exemption (Issue 640) B.E. 2560 has been announced to provide tax exemption for the cost of the EDC equipment which install during November 1, 2016 to December 31, 2018 and for the service fee for using the equipment during November 1, 2016 to December 31, 2020.
Labor: Work rules
Though the Ministry of Labor has announced that the work rules will no longer need to be required to register with the Labor Office, but it shall be emphasized that employer having ten or more employees must still have a work rule in the work place accordance with Labor Protection Act. Any violation may be subjected to imprisonment of 6 months to 2 years or fine from Baht 5,000 to Baht 800,000 or both.