Getting the BOI promotion is the easy part. Keeping it is accounting.
A promotion grants tax privileges on income from a specified activity. That means you have to be able to demonstrate, in your books, which income and which profit that was. Companies lose privileges not because they broke a rule but because they could not prove they had not.
- Segregation
- Promoted and non-promoted,
from the first entry - Shared costs
- A documented, consistent
allocation basis - Reporting
- Annual, to the BOI
- Privileges
- Machinery and raw material
records reconciled - Conditions
- As stated in your certificate
- Application work
- Narai Partners
- At risk
- The tax holiday itself
Six ways promoted companies get caught
Promoted and non-promoted revenue in one ledger
The single most common failure. A promoted company that also sells something outside the promoted activity must account for the two separately, and if that separation was not designed at the start it has to be reconstructed from source documents years later.
Shared costs allocated on a basis nobody can defend
Rent, utilities, management salaries, depreciation on shared assets. There is no single prescribed method, which people mistake for there being no requirement. What is required is a reasonable, documented, consistently applied basis you can explain years afterwards.
Exceeding the promoted capacity or scope
Promotions are granted for a specified activity and often a specified capacity. Growth beyond it is not automatically covered, and revenue outside the promoted scope is ordinary taxable income whether or not you booked it that way.
Machinery and raw material privileges without the paperwork
Import duty exemptions carry their own record-keeping and reporting. The privilege is real, and so is the reconciliation between what you imported, what you used and what you still hold.
Conditions in the promotion certificate nobody has read since
Employment ratios, minimum capital, technology transfer, environmental conditions, reporting deadlines. They are specific, they are in the certificate, and they are checked.
Losing the corporate income tax holiday by accident
Because the holiday applies only to net profit from the promoted activity, a company that cannot demonstrate which profit that is may find the exemption denied on part or all of it. That is an expensive way to learn accounting discipline.
What we take on
Design the segregation before it is needed
A chart of accounts that separates promoted and non-promoted from the first entry, with cost centres that reflect the promotion rather than the org chart. Retrofitting this is the expensive version.
Write the allocation policy down
The basis for every shared cost, why it was chosen, and evidence it is applied consistently. A written policy applied for three years is defensible. A calculation produced during a review is not.
Run the reporting calendar
Annual reports to the BOI, the corporate income tax return with the promoted activity properly presented, and the reconciliations that connect the two. Tracked alongside your Revenue Department and DBD deadlines rather than separately.
Reconcile privileges to the ledger
Machinery and raw material exemptions matched against what the books say you hold and consumed, so that a query is answered from records rather than from memory.
Model what the promotion is actually worth
Companies routinely accept conditions worth less than the compliance cost of meeting them. Knowing the value in cash terms tells you how hard to work at keeping it, and whether a second promotion is worth applying for.
Prepare for the end of the holiday
A tax holiday ending is a step change in cash tax that should be modelled years ahead, not discovered in the year it happens.
The full Thai statutory calendar · BOI applications, through Narai Partners
Scope and boundaries
Do you apply for BOI promotion?
No. That is legal and application work, and our sister firm Narai Partners does it, and their BOI and foreign investment practice is the right starting point. We handle what happens afterwards, which is the part almost nobody plans for: keeping the accounting compliant so the privileges survive.
Our accountant says they handle BOI. Is that enough?
Often not, and this is not a criticism of them. A good Thai bookkeeper records what happened accurately. Designing a defensible cost allocation policy and demonstrating which profit arose from the promoted activity is a different skill, and it is the skill the privilege depends on.
We are already several years in and the accounts are not separated. What now?
It is fixable and it is better to fix it before anyone asks. The work is reconstructing the split from source records, agreeing an allocation basis, restating the presentation, and documenting the reasoning. Expect weeks rather than days, and expect it to be cheaper than the alternative.
Does this apply to an IBC or a treaty company too?
The same principle applies to any regime that grants a benefit conditional on a defined activity, including the International Business Center. The privilege attaches to specific income, so you must be able to show which income that is.
Can you work alongside our existing tax adviser?
Yes, and usually we do. They take positions with the authorities. We make sure the underlying records support the position, which is the part that tends to be missing when a query arrives.