Offset of losses of one promoted project against the profits of other promoted project (s)

(10/2009)

The Revenue Department has been instructing taxpayers to offset losses of one promoted project against the profits of other promoted project (s). In February 2009, the Board of Taxation (BOT) Ruling was published stating :

“Where an entity has several BOI (Board of Investment) promoted projects, the incomes and expenditures of all of such projects within the same accounting period must be considered together in determining the net profit or net loss of the business which has been granted BOI priviledges “

The Board of Investment (BOI) disagreed with the Revenue Department’s position. The BOI is of the opinion that the intent of the Investment Promotion Act Section 31 paragraph 4 is the annual loss of one promoted project is to be offset only against the profits of that particular project. The BOI had taken the matter up with the State Council.

We understand that the State Council has issued an opinion on March 18 2009 that the method of computation of the annual losses according to the opinion of the BOI is correct . BOI has now moved this matter up to the Minister of Finance and it is hoped that the appropriate instructions which will reverse the BOT February ruling will be issued before the corporate income tax filing deadline in May 2009.