Who this is for, and the short answer
This guide is for a foreign-owned Thai company whose BOI certificate covers one activity while the business actually does several. The typical case: software development is promoted, but the company also sells consulting and resells goods.
The short answer is that a BOI certificate promotes a project, not a company. Three things follow:
- The tax exemption reaches only the profit of the promoted activity.
- The Foreign Business Act relief that comes with promotion reaches only the business described in the certificate.
- Everything else the company does is ordinary Thai business, taxed and licensed as such.
Nothing here makes a mixed company unlawful. It makes separation the thing you must be able to prove. For what the certificate requires of you after approval, read our guide on living with promotion after approval. This guide only covers the mixed-activity problem.
What the certificate covers, and what it does not
BOI rule. Under the Investment Promotion Act, section 31 exempts a promoted person from juristic person income tax on "the net profit derived from the promoted activity". Section 34 exempts dividends from an undertaking under that exemption, for as long as the exemption runs. Section 32/1 says the computation of net profit and loss follows the Revenue Code.
So, in a company with a promoted software line and a non-promoted consulting line:
- Software profit within the approved project: exempt, for the period and within any cap set in the certificate.
- Consulting profit: taxed normally.
- Goods resale: taxed normally.
Read the certificate wording carefully. Whether a given revenue stream is "the promoted activity" turns on the activity description, the product or service list and any project-specific conditions in the certificate, not on how the company describes itself. For SaaS sold to overseas clients, see our guide on that specific question.
Does the non-BOI side need a Foreign Business Licence?
This is the point most mixed companies discover late.
The law. A Thai-registered company is treated as a foreigner under the Foreign Business Act if half or more of its capital is held by foreign persons (or by entities themselves treated as foreign). Such a company may only run the businesses listed in the Act's three annexed lists under the conditions each list sets.
What promotion changes. The Department of Business Development explains that a promoted foreigner can ask for a Foreign Business Certificate under section 12 for List Two and List Three businesses, to the extent specified in the promotion certificate. The certificate is issued by the Director-General of the Department, within the period the Department states after the request. The Department also notes that a certificate holder under this route must follow the conditions in the promotion certificate.
What it does not do. The section 12 route is tied to the promoted business. Our reading, which you should confirm for your own certificate, is that activities outside the promoted project are not covered by it.
For a foreign-majority company that leaves a classification exercise for each non-promoted line:
| Non-promoted line | Foreign Business Act position (general) | Likely route |
|---|---|---|
| Management or business consulting | Falls under List Three "other services" unless an exclusion applies | Foreign Business Licence, or a treaty route if you qualify |
| Retail or wholesale of goods | List Three, with minimum capital thresholds set in the Act | Licence, or restructure so the trading entity is Thai-majority |
| Accounting, legal, architecture or engineering services | List Three, no easy route for a foreign-majority company | Do not offer them through this company |
| Anything in List One | Closed to foreign-majority companies | Not available |
Classification is fact-specific. Our guide on how service and trading businesses get classified walks through the interview we use. A pending licence application is not permission to start.
How to separate scope, revenue and accounts
BOI rule. The exemption attaches to the net profit of the promoted activity, and dividends are exempt only if they come out of that exempt undertaking. The Act therefore requires you to be able to show what the promoted net profit is. The detailed BOI and Revenue Department procedures for claiming the exemption and allocating shared items should be taken from the current BOI notices and your tax adviser, because we could not confirm their wording from a primary source for this guide.
Our practical advice. Build the separation in from the first invoice.
- Map each revenue stream to the certificate. Write one page: stream, matching wording in the certificate, supporting contract type. Streams that do not match are non-promoted.
- Use separate revenue accounts and cost centres in the ledger for promoted and non-promoted work, with separate project codes in time recording.
- Allocate shared costs by a written rule (headcount, hours, revenue or usage) that you apply the same way every year. Staff who work on both sides are the usual weak point.
- Keep a separate fixed-asset register. Equipment imported under a duty privilege may only be used in the promoted business; check the post-approval guide before it is shared with the other side.
- Reconcile at year end to a promoted/non-promoted split that ties to the audited accounts and the tax return.
- Track dividends by source. Before any distribution, record how much comes from exempt promoted profit.
- Report both in the periodic reports the BOI requires, using the same numbers as the tax filing.
Invoices and contracts
- Issue separate invoices for promoted and non-promoted work. Do not bundle a software licence, a consulting day rate and a hardware resale on one line.
- Describe the promoted service in the same words as the certificate. Do not rename products in contracts in a way that blurs the match.
- In a mixed contract, price each component separately and state the allocation. A single lump sum invites argument about how much of it is exempt.
- Make sure who delivers what is clear: staff and tools for the promoted work should be identifiable.
- Keep the customer and delivery evidence for the promoted stream in a form you can hand to the BOI officer or a tax auditor without rebuilding it.
Work permits and visas
Foreign specialists brought in under promotion are permitted for a specific position approved by the Board (Investment Promotion Act, sections 25 and 26). The permission is tied to the promoted project.
In practice, a foreign engineer approved for the promoted software work cannot be moved to selling goods or running consulting engagements without a fresh look at their permit. Staff on the non-promoted side fall under the ordinary work permit rules, with the company's capital and Thai-employee requirements applying. Plan roles before you hire. See our guide on BOI work permits and visas and which visa structure fits.
When a separate company is cleaner
Our advice, not a legal requirement: consider a second entity when any of these apply.
- The non-promoted activity needs its own foreign business licence and the licensing conditions would affect the promoted business.
- The two businesses have different customers, staff or risk, so shared costs are hard to allocate defensibly.
- You plan to sell or bring in investors to only one side. A buyer of a BOI-promoted company will examine the mix closely.
- The non-promoted side could be run by a Thai-majority company that is not subject to licensing.
- The group would find it easier to use an existing Thai company for the other lines.
The trade-off is real: a second company has its own accounts, audit, registrations and directors, and intercompany charges must be at arm's length. For a small business that is a genuine cost. Weigh it against the cost of a defective allocation.
Further reading
- Living with promotion after approval
- Foreign business licence for service and trading companies
- Accounting and tax obligations of a foreign-owned Thai company
- BOI work permits and visas for employers
Promotion covers a project, so build the wall between promoted and non-promoted business before the first invoice, not after the first audit.
We help foreign-owned companies decide how to structure promoted and non-promoted activities, and set up the licensing and accounting to match. Initial consultation is free — call +66 92 254 2045 or send us the details. See also accounting and tax services and business licences.
This guide is published by Suwanvara Law Firm — a Khon Kaen law firm established in 1986. General information only, not legal advice on a specific matter.
