For many foreign investors, receiving a Thailand Board of Investment (BOI) promotion certificate is the “Golden Ticket” to doing business in Thailand. It unlocks 100% foreign ownership, generous tax holidays, and streamlined visa and work permit processes. However, a Thailand BOI certificate is not a “set it and forget it” document. It is a conditional contract with the Thai government.
It comes with clear, enforceable obligations. If those obligations are not met, the BOI can withdraw incentives, impose penalties, or even revoke promotion status.
At Herrera & Partners, we often see businesses focus entirely on the application phase, only to struggle once the clock starts ticking on their compliance obligations. Failing to maintain these standards doesn’t just result in paperwork, it can lead to the retroactive loss of tax benefits and the revocation of your right to operate.
If you are a foreign investor keen on learning more about Thailand board of investment, you’ve come to the right place. Here, we’ll explain the key compliance obligations, common risks, and practical steps businesses should take to stay compliant.
If you need guidance on BOI compliance or want to review your current status, Herrera & Partners can provide a detailed assessment and ongoing support.
What Is the Thailand Board of Investment (BOI)?
The Thailand Board of Investment is a government agency responsible for promoting investment in Thailand. Its goal is pretty much straightforward:
- To attract foreign capital.
- To boost key industries.
- To support economic development.
Companies that receive BOI promotion are granted benefits that are not available under normal business registration.
Common BOI incentives include:
- Tax exemptions on corporate income tax.
- Reduced import duties for machinery and raw materials.
- Relaxed foreign ownership limits in certain sectors.
- Easier visa and work permit approval for foreign staff.
These benefits can be a powerful tool for growth. However, they are granted based on specific conditions.
Once a company is promoted, it must meet and maintain those conditions throughout the promotion period.
Key BOI Compliance Obligations
Once a company receives BOI promotion, compliance becomes an ongoing responsibility. The BOI does not only assess whether a business qualified for incentives at the start. It monitors whether the company continues to meet the conditions attached to its promotion. Understanding these obligations early helps businesses avoid unnecessary risk and disruption.
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Maintaining the BOI Promotion Conditions
Each BOI promotion certificate sets out specific conditions that the promoted company must follow. These conditions must be met exactly as approved unless formal permission is obtained from the BOI.
Minimum investment requirements
Most BOI promotions require the company to meet a minimum investment threshold within a defined timeframe. This typically includes:
- Investment in machinery, equipment, or technology.
- Construction or facility development costs.
- Approved operational assets.
Failure to meet the investment threshold, or delays without BOI approval, is a common compliance issue. Businesses should track investment milestones carefully and retain supporting documentation.
Approved business scope
BOI promotion is granted for clearly defined business activities. Companies must operate strictly within the approved scope. Risks arise when:
- New services or products are introduced without BOI approval.
- Revenue is generated from unapproved activities.
- The business model changes after promotion is granted.
Any material change in operations should be reviewed in advance and, where required, submitted to the Thailand Board of Investment for approval.
Employment and training obligations
Many BOI promotions include obligations relating to Thai employment and workforce development, such as:
- Minimum number of Thai employees.
- Ratios between Thai and foreign staff.
- Training or skills transfer requirements.
These conditions are actively monitored. Failure to meet employment commitments can affect BOI privileges, including work permit approvals.
Local sourcing and manufacturing requirements
In certain industries, the BOI may impose local content or manufacturing obligations. These can include:
- Use of local suppliers.
- Minimum local production levels.
- Restrictions on imported inputs.
Businesses should ensure procurement and production practices align with BOI conditions and that evidence of compliance is maintained.
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Reporting and Documentation
BOI compliance depends heavily on accurate reporting and proper documentation. Even compliant businesses can face issues if records are incomplete or inconsistent.
Annual reporting obligations
Promoted companies are required to submit regular reports to the Board of Investment, typically covering:
- Investment progress and capital expenditure.
- Employment levels and staffing structure.
- Operational status and business activities.
- Financial performance.
Reports must be accurate, consistent, and submitted on time. Late or incorrect filings often lead to increased scrutiny.
Maintaining records for audits
The Thailand Board of Investment has the authority to audit promoted companies at any time. Businesses should maintain organized and accessible records, including:
- Financial statements and accounting records.
- Payroll and employment documentation.
- Training and HR records.
- Investment and asset documentation.
Strong record keeping reduces risk during audits and helps resolve BOI inquiries quickly.
Submitting changes to the BOI
Any material change to a BOI-promoted business must be disclosed and, in many cases, approved before implementation. This includes:
- Business expansion or relocation.
- Changes in shareholding or ownership structure.
- Appointment or replacement of directors.
- Changes to approved business activities.
Proceeding without BOI approval can place the company in breach of its promotion conditions.
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Work Permits and Foreign Employment Quotas
One of the key advantages of BOI promotion is increased flexibility in hiring foreign employees. However, these benefits are closely tied to compliance.
How BOI status affects work permits
BOI-promoted companies often benefit from:
- Easier work permit approvals.
- Higher permitted numbers of foreign staff.
- Faster processing for key personnel.
These advantages apply only if the company remains fully compliant with its BOI obligations.
Requirements for foreign staff and quota limits
Foreign employment under BOI promotion is subject to clear limits, often based on:
- Investment size.
- Number of Thai employees.
- Approved roles and qualifications.
Companies must ensure foreign staff are employed only in approved positions and within permitted quotas.
Common compliance issues
Frequent compliance problems include:
- Employing foreign staff without BOI approval.
- Failing to meet Thai employment ratios.
- Inconsistencies between reported staffing data and payroll records.
- Assigning foreign employees to unapproved roles.
These issues are often identified during BOI audits and can lead to warnings, restrictions, or suspension of privileges.
Common Compliance Triggers and Red Flags
Compliance issues rarely come out of nowhere. In our experience at Herrera & Partners, certain “triggers” usually lead to a formal investigation or an uncomfortable audit:
- Delayed Commencement: If your certificate says you will start operations within 24 months and you haven’t hit your milestones, the BOI will want to know why.
- Inconsistent Financials: If your tax filings with the Revenue Department show a massive profit but your BOI reports show a loss (or vice versa), the discrepancy will trigger an inquiry.
- Significant Changes in Ownership: If more than 25% of the company’s shareholders change, or if the ultimate controlling interest shifts, you must notify the BOI. Failure to do so can invalidate your certificate.
- Idle Machinery: For manufacturing projects, if the machinery imported under duty-free incentives is found to be unused or sold to a third party without permission, the penalties are severe.
The High Cost of Non-Compliance
It is a mistake to view BOI compliance as a minor administrative hurdle. The consequences of “slipping up” can be existential for a business:
- Revocation of Incentives: The BOI can revoke your tax-exempt status. If this happens, the Revenue Department may come after the company for “back taxes” covering the entire period of the promotion.
- Import Duty Clawbacks: If you imported millions of dollars worth of machinery or raw materials duty-free and are found in breach of conditions, you will be required to pay the original duties plus interest and fines.
- Loss of Land Ownership Rights: Non-BOI foreign companies generally cannot own land in Thailand. If your BOI certificate is revoked, you may be forced to sell your land and buildings within a very short timeframe (usually 6 months to a year).
- Visa Cancellations: If the project is terminated, the work permits and visas of all foreign staff under that project are typically cancelled within 7 days, causing massive operational disruption.
Best Practices for Long-Term BOI Compliance
To stay compliant, businesses should move away from “emergency reporting” and toward a Compliance Governance model.
- Standard Operating Procedures (SOPs): Create a calendar of Thailand Board of Investment deadlines that is independent of any one employee. If your HR manager leaves, the BOI reporting deadlines should not leave with them.
- Annual “Health Checks”: Perform a mock audit once a year. This allows you to catch missing documentation or investment shortfalls before the BOI does.
- Professional Oversight: Many companies use a general accountant for their BOI filings. However, BOI regulations change frequently. Engaging a legal advisor who understands the nuances of the Investment Promotion Act is essential.
How Herrera & Partners Can Help
Navigating the Thai bureaucracy requires more than just translating documents. It requires an understanding of the intent behind the law. At Herrera & Partners, we provide a comprehensive suite of BOI support services designed to give investors peace of mind.
- Compliance Reviews: We conduct comprehensive audits of your current operations to identify and fix red flags before they become legal liabilities.
- Reporting Support: We handle the complexities of e-Reporting and project progress submissions, ensuring accuracy and timeliness.
- Liaison Services: We act as your representative before the Thailand Board of Investment, handling queries, amendments to certificates, and extension requests.
- Corporate Structuring: We ensure your shareholding and capital structure remain compliant with the latest BOI and Foreign Business Act requirements.
In conclusion, BOI promotion is a major advantage for businesses in Thailand, but it is not a free pass. It requires careful compliance with conditions, accurate reporting, and strong documentation. The Thailand Board of Investment has the authority to revoke privileges when conditions are not met, which can have serious operational and financial consequences.
If you need support with BOI compliance or want to review your current status, Herrera & Partners is available to help.
