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What to do After Receiving Your BOI Company Approval
03/09/2024
Obtaining a BOI promotion can be a long and arduous process, but the benefits it brings to foreigners investing in Thailand is immeasurable. However, the company’s obligations to the BOI (Thailand’s investment board) do not end upon receiving the BOI acceptance letter as there are still a series of requirements to satisfy before starting your business activities, hiring employees and issuing invoices.
This blog post will explore the compliance requirements for a BOI company who has just been awarded their BOI Acceptance Letter until they can start their business operations.
Key points
- After receiving the BOI acceptance letter, companies must register a Thai company within 6 months and transfer the required investment from overseas within 4 months.
- BOI-promoted companies need to obtain a Foreign Business Certificate for regulated activities and apply for visas/work permits for foreign specialists through a streamlined process.
- Regular project progress reports and annual reports must be submitted to the BOI, with a full audit required after 3 years to verify compliance.
- A BOI company must book expenses carefully to comply with their BOI Promotion conditions
BOI Acceptance Letter
A BOI acceptance letter, issued by the Board of Investment (BOI) of Thailand, signifies that your application for investment promotion has been approved. An acceptance letter from the BOI will typically outline the specific investment promotion package awarded to your company and the conditions. This might include details like:
- Minimum investment requirement
- Authorised business activities
- Tax benefits (e.g., corporate income tax exemption)
- Import duty exemptions on machinery
- Permission to hold a higher percentage of foreign ownership in your company (compared to the usual limits)
- Other benefits depending on the project and industry
After receiving the acceptance letter applicants have one month to accept the letter. After notifying the BOI of the acceptance applicants have to register their company within 6 months. It is possible to extend the acceptance once.
Company Registration
To secure the BOI acceptance letter, the applicant is required to form a Thai company within six months from the date their application is approved. It is also possible to use an existing company and restructure it accordingly. It is possible to request an extension of the six months time frame up to two times.
To start a limited company in Thailand, you will need to satisfy the following criteria:
- At least 2 shareholders
- One or more directors (individuals, not corporate)
- Registered capital (BOI will require a certain amount which be announced upon approval of the promotion)
- A registered corporate address in Thailand
- The shareholders must be individuals to register the company. Once registered, the shares can be transferred to corporate shareholders.
For more information about the requirements for starting a company in Thailand, please see our blog post here.
Transferring the Minimum Investment
After receiving the BOI acceptance letter, the applicant must transfer the required capital investment within 4 months. If it is not possible to transfer the capital amount within 4 months, the applicant will be required to apply for an extension from the BOI.
It is essential to note that the money being used for the registered capital must be remitted to Thailand from overseas. The requirement for the capital to come from abroad applies only to the foreign shareholders, Thai shareholders do not need to remit the capital from abroad.
The transferred money must also be sent under the name of the foreign investor and the receiver of money must be the company who has been awarded the BOI certificate.
The BOI will request a FET transfer form (Foreign Exchange Transaction Form or Credit Advice) and will check that the transfer has been specified as “capital investment” or something similar. If the FET form states that the purpose of the transfer is for a loan etc, the said transfer will not be accepted by the BOI as proof of capital investment.
If the company has already been registered with fully paid up capital, the BOI may ask to check that the capital has been fully paid up and proof of this payment.
It is also important to note, that as of today any transfers made through services such as Wise may not be accepted by the BOI if they cannot provide the credit advice document.
BOI Promotion Certificate
Once the company registration has been completed and the required investment amount has been paid, the applicant may apply for their BOI certificate.
Foreign Business Certificate
Once you have received your BOI certificate, the company may be allowed to undertake some activities as a majority foreign owned company. However, if the activity in question is restricted by the Foreign Business Act (FBA), the company will be required to obtain a Foreign Business Certificate (FBC). In practice, most service activities are restricted under the FBA and will require obtaining a FBC.
The FBC is issued by the Ministry of Commerce and allows majority foreign ownership for companies undertaking restricted business activities after receiving their BOI certificate.
In practice, it usually takes approximately 2 weeks to receive the FBC. Once the FBC has been obtained, the company will be allowed to start invoicing clients for those restricted activities.
Please note, the FBC only applies to the promoted activities specified in the BOI promotion and certificate. Engaging in additional, non-promoted activities that are restricted by the FBA will require a separate Foreign Business Licence application.
Applying for Visas and Work Permits for Foreign Specialists
The following process must be completed in order for a foreign skilled worker to obtain a BOI visa and work permit. The application process can begin after the company has obtained their BOI Certificate.
After receiving the BOI certificate the company can apply for access to the BOIs Single Window system. The Single Window allows the company to obtain the required online credentials to open job positions for foreign skilled workers. This is a requirement for BOI companies to be able to apply for the visa and work permit for foreigners without the restrictions of the minimum quota of Thai employees per foreign employees.
Opening a new position on the online BOI platform
Firstly, the BOI-promoted company will open a new position for the job matching the applicant’s qualifications on the online BOI Single Window platform.
After approval of the position, the applicant’s qualifications will be uploaded for approval by BOI.
Applying for a Non-Immigrant B (Non-B)
After receiving approval for the new position, an invitation letter from BOI will be issued. This letter will be submitted to the Thai Embassy as part of the non-immigrant B visa application.
Obtaining your work permit and visa extension
Once the foreign employee enters Thailand, the application for the work permit is submitted through the BOI Single Window System. After approval, the applicant can collect their work permit and extension at the One Stop Service Center (BOI One Stop Service — Chamchuri Square). The yearly renewals are also undertaken at the One Stop Service Center (BOI One Stop Service — Chamchuri Square).
Reporting and Compliance for BOI Companies
Newly endorsed BOI companies must not forget that they are required to regularly update the BOI by submitting monitoring reports on their progress. These reports ensure the project aligns with the approved BOI promotion.
These reports are due as follows:
Project Progress Reports:
- You must submit project progress reports to the BOI at specific intervals:
- 6 months: Confirm project implementation is ongoing.
- 1 year and 2 years: Provide updates on project progress.
- After 3 years the project will be subject to an audit of the company’s financial statements by a BOI-approved auditor.
BOI Accounting
Companies who have received their BOI promotion should be aware that once they start their approved activities they must make sure that their accountant is familiar with the BOI and their accounting requirements. The reason for this is because BOI companies usually come with increased scrutiny with regards to their accounts. For instance, most BOI companies have an obligation to spend 1 million Thai Baht in fixed assets.
While this may seem straightforward, what is considered fixed assets are subject to the interpretation of the BOI. It is important to properly identify and book such purchases as this will be required to fulfil this requirement and get your final BOI confirmation after the three year audit. Your accountant must make sure that the proper expenses are booked accordingly because once they have been booked and audited it’s really difficult to make a revision if a mistake has been made.
Secondly, some companies who have received a promotion from the BOI will also have had some investment conditions attached to their promotion. If this is the case, these investment conditions must be booked correctly in order to prove that they have been satisfied.
One final consideration for accounting is that if your BOI company has been awarded tax incentives it’s really important to be careful about what is put on any invoices issued. Companies must make sure that the services where they issue an invoice and claim a tax exemption are fully within the scope of the BOI and of the foreign business certificate (if the company is foreign-owned). If the invoice is considered outside of the relevant scope, the company runs the risk of having a tax audit and the associated consequences. This is an important consideration because some activities undertaken by the company may not be eligible for tax incentives. For any ineligible services, the company must have separate accounting and yearly tax filings for this.
Ensuring that the companies accounts are in order is really important because if you submit your three year audit and your accounts are not in order, the BOI may either delay your final approval and seek justification for this and/or discontinue the BOI benefits.
How can Belaws help?
For more information about obtaining a BOI promotion in Thailand why not talk to one of our experts now?
Please note that this article is for information purposes only and does not constitute legal advice.
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Frequently asked questions
What should I do immediately after receiving my BOI acceptance letter?
You should notify the BOI of your acceptance, then proceed to register your company in Thailand within 6 months. You also need to transfer the required capital from overseas within 4 months.
How can I register my company in Thailand after receiving BOI approval?
You can register a new Thai company or restructure an existing one to meet BOI requirements. Ensure you have at least 2 individual shareholders, one or more directors, registered capital, and a corporate address in Thailand.
What are the requirements for transferring capital to Thailand?
The required capital must be transferred from abroad and be in the name of the foreign investor. The transfer must be designated as “capital investment” on the Foreign Exchange Transaction Form (FET) or similar documentation.
What is a Foreign Business Certificate (FBC) and when do I need it?
An FBC is required if your company plans to engage in activities restricted by the Foreign Business Act (FBA). It allows majority foreign ownership for those activities and is obtained from the Ministry of Commerce.
How do I apply for visas and work permits for foreign employees?
After obtaining your BOI certificate, use the BOI Single Window platform to open job positions and apply for visas and work permits for foreign specialists. This process includes obtaining an invitation letter from BOI and submitting it to the Thai Embassy.
What are the reporting requirements for a BOI company?
You must submit project progress reports to the BOI at 6 months, 1 year, and 2 years. After 3 years, a full audit by a BOI-approved auditor is required.
How should I manage accounting to comply with BOI conditions?
Ensure all expenses and capital are correctly booked according to BOI requirements. Special attention is needed for fixed assets and tax-exempt activities. Incorrect accounting can lead to issues with your final BOI approval.
What if I need more time to complete company registration or capital transfer?
You can request extensions for both company registration (up to two times) and capital transfer if necessary.
Can I use services like Wise for transferring capital?
It’s important to ensure that the service used can provide the required credit advice document. Some services may not meet BOI requirements if they cannot provide this documentation.
What happens if my accounting is not in order during the final audit?
If your accounts are not properly managed, the BOI may delay your final approval, request additional justification, or even discontinue your BOI benefits.
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