Issues to Consider if a Company wishes to apply for BOI (TISO) Promotion

Many companies in Thailand think that Thailand’s Board of Investment (BOI) promotions are focused on promoting manufacturing but few are aware that the BOI also offers promotion privileges for services companies such as those involved with engineering services, technical services as well as wholesaling; such promotion falls under Activity 7.7 otherwise known as Trade and Investment Support Office or ‘TISO’. This article shall cover some important factors which a company should consider before they apply for this type of investment promotion, including the conditions which apply to the grant, benefits of TISO and compliance matters.

TISO Conditions

For a company to be eligible for TISO promotion, it must meet the following conditions which are set out by the BOI under activity 7.7 of its handbook:

1. Annual sales and administrative expenses must be at least 10 million baht;
2. It must have a business plan and scope of business approved by the BOI, as follows:

a.  Monitoring and/or servicing associated enterprises including providing or letting office or factory building to company’s associated enterprises;

b.  Advisory services on business operations, except those engaged in buying and selling securities and foreign currency exchange. Moreover, accounting, legal, advertising, architecture and civil engineering businesses must obtain business licenses from the Department of Business Development (DBD) or related government agencies prior to submitting their investment promotion application with the BOI;

c.  Information services on goods sourcing;

d.  Engineering and technical services, except those related to architecture and civil engineering services;

e.  Business activities related to machinery, engines, tools and equipment, such as:

1. 1. 1. Importing for wholesaling;
      2. Training services;
      3. Installation, maintenance and repair;
      4. Calibration.

f.  Wholesaling products manufactured in Thailand;

g.  International business process outsourcing whose services are provided through telecommunication networks, such as administrative services, finance & accounting services, human resource services, sales & marketing services, customer services, data processing, etc.

It is also worth emphasizing that only a company registered in Thailand can be granted TISO promotion rather than an individual or other type of juristic person such as a Representative Office or a Branch Office. However, when an application is made, it is not necessary to have the company already registered as this can happen in a specified period after the BOI gives preliminary approval for an application.

Ongoing Compliance for BOI (TISO) Promotion

After the BOI has granted its BOI (TISO) promotion certificate to the applying company, the applicant company will need to be careful to meet various compliance conditions, including:

1. If the company is granted the right by the BOI to bring in foreign staff into Thailand to work in the promoted business, then the company must not use or allow such foreign skilled workers or experts to carry on other occupations or perform other duties which fall outside the scope of duties for their approved positions;
2. The company must prepare and submit reports to the BOI regarding the foreign skilled workers or experts it employs and how much they have trained Thai nationals to gain relevant knowledge and skills;
3. A progress report on the promoted project must be delivered to the BOI in accordance with its prescribed form on or before February and July of each year from the issuance of the Promotion Certificate until a license to commence the business is obtained by the BOI. However, for a project to which a Promotion Certificate is issued in February and July, a progress report on the project shall commence in the subsequent month in which the report must be delivered.
4. If the promoted company shall change its registered address then it must submit a notice of a change of domicile to the BOI, along with an updated Affidavit of Company Registration issued by the DBD.
5. Ordinarily the TISO business must be ready to commence its operations within 36 months from the date of issue of the Promotion Certificate. When the company is ready, it must submit a notice of application for business commencement to the BOI in accordance with the form it prescribes.
6. The Company will ordinarily have to meet certain specified registered capital requirements which are based on its BOI (TISO) application, such that the Company must have a certain amount of fully paid up registered capital before it can inform BOI that it is ready to commence its operations.
7. Incurred operational expenses for the company must not be less than 10,000,000 Baht a year (that is, sales and administrative expenses under the Revenue Code).
8. The size of investment (exclusive of the cost of land and working capital) must not be less than 1,000,000 Baht.
9. If the company’s business requires other licenses and permits be obtained then such approval or licenses for the conduct of activities must be obtained from the state agencies under the relevant laws.

Benefits Available to the Company Granted TISO Promotion

The key benefits available to a company which is granted TISO promotion are as follows:

1. The Company can be majority foreign owned by non-Thai shareholders.
2. If the Company is located in Bangkok then its ex-pat (foreign) staff can take advantage of the One Stop Service Centre with respect to visa extensions and work permit applications.
3. The Company can bring into Thailand a reasonable number of foreign (non-Thai) staff to work in the promoted business. The number of foreign staff should generally reflect what is stated in the TISO application’s employment plan but it could differ depending on the company’s circumstances but in any case the numbers of non-Thai staff must be justifiable and reasonable as otherwise the BOI will not approve it.

Writer: Ryan Crowley – Foreign Services Manager

Dharmniti Law Office Co., Ltd.

2/2 Bhakdi Building 2nd Floor, Witthayu Road, Lumphini, Pathumwan, Bangkok 10330.

Tel: (66) 2680 9777

Fax: (66) 2680 9711

Email: info@dlo.co.th