Thailand Releases Tax Measures for Flood-Affected Investment

Mar. 13 – In order to assist and rehabilitate investments affected by last year’s flooding, Thailand’s Board of Investment – by virtue of Section 16 and Section 18 of the Investment Promotion Act of B.E. 2520 – announced on February 23, 2012 a series of tax measures which are discussed below.

The new measures are effective from December 29, 2011 and applicants must submit applications for this measure before December 31, 2012.

General measures for entrepreneurs directly affected by flooding
Application
These measures apply to existing promoted projects whose machinery and/or factory buildings were damaged by the flood and who still have remaining unused corporate income tax exemption amounts and periods.

Coverage
Investment excluding the cost of land and working capital under these measures refers to investment in fixed assets such as factory construction, machinery, and equipment – including costs of repairing damaged factory buildings, machinery and equipment and the costs of replacing machinery previously imported under Board of Investment Announcement No. 4/2554, dated January 17, 2011.

Rights and benefits
1. Existing promoted projects subject to the corporate income tax exemption cap shall be granted an eight-year corporate income tax exemption with the cap of 150 percent of the investment specified in “Coverage” plus the remaining unused cap of the projects, if they continue to stay in the same flooded provinces where the projects are located.

In case of relocation to other provinces, promoted projects subject to the corporate income tax exemption cap shall be granted an 8-year corporate income tax exemption with the cap of 100 percent of the investment specified in “Coverage” plus the remaining unused cap of the projects.

2. Existing promoted projects that receive corporate income tax exemption without being subject to a corporate income tax exemption cap can choose one of the following options:

To receive the same rights and benefits as specified in point “1” above; or
To receive an additional corporate income tax exemption of up to three-years on top of the remaining unused tax exemption period. However, the total tax exemption period must not exceed eight years. Apart from the additional income tax exemption, promoted projects with more than five-years remaining unused tax exemption period will also receive additional incentives as follows:

Projects that have a remaining unused tax exemption period of over five years up to six years will receive an additional 50 percent corporate income tax reduction for two years.
Projects that have a remaining unused tax exemption period of over six years up to seven years will receive an additional 50 percent corporate income tax reduction for four years.
Projects that have a remaining unused tax exemption period of more than seven years will receive an additional 50 percent corporate income tax reduction for the five years.

3. Existing promoted projects shall be granted import duty exemption on both new and used machinery not older than 10 years regardless of project location.

4. Existing promoted projects shall be permitted to use existing machinery that still functions in the project under these measures, including replacement machinery previously imported under Board of Investment announcement No. 4/2554, dated January 17, 2011 and to increase production capacity according to actual capacity of additional machinery.

Industrial estates and industrial zones
Measures for industrial estates or industrial zones, including those affected by the flood and those not affected by flood provide that projects shall receive an eight-year corporate income tax exemption with a cap of 200 percent of investment excluding costs of land and working capital. Eligible projects must invest in basic infrastructure construction to prevent flooding and set a fair service fee to be collected from companies within their industrial estates or zones according to criteria set by Thailand’s Office of the Board of Investment.

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