For entrepreneurs granted investment promotion by the BOI, a critical responsibility that accompanies tax incentives is the management of assets and raw materials in accordance with strict conditions.

This is especially vital when it comes to handling damaged machinery or Scrap generated during the production process. To ensure that physical data matches the accounting records and tax evidence, understanding the types and procedures of inspection is an essential step that businesses cannot overlook.

 

What is Scrap Inspection?

Scrap refers to raw materials, parts, or waste generated during the production process that were previously imported using BOI duty exemptions and can no longer be used for their original purpose.

Examples of Scrap subject to inspection

● Production Residue: Such as metal scraps, plastic sawdust, or fabric remnants from cutting and molding.

● Defective or Substandard Parts (NG): Items that fail quality control.

● Non-Formula Wastage: Waste generated outside the standard production formula.

Primary Goal of Inspection

To verify that the items and quantities of scrap match the accounting records and the BOI approval letter before proceeding with the raw material stock discharge from the system.

 

What is Machinery Destruction Inspection?

This refers to the inspection of the destruction process for machinery imported under BOI incentives in cases where the machinery is damaged, obsolete, unusable, or has met the criteria for approved disposal (De-registration).

Primary Goals of Inspection

● To verify that the Model and Serial Number match the Machinery Account (Master List) and import documents.

● To prove that the machinery is indeed in a condition where it cannot be used further for its original purpose.

● To serve as critical evidence for requesting the approval of disposal or discharging the machinery from the BOI project.

 

Operational Inspection Procedures

To ensure operations meet BOI-defined standards, the inspection process is divided into three distinct phases:

I. Pre-Inspection

The identification and verification of the type and quantity of Scrap or machinery. This involves cross-referencing physical items with the BOI Destruction Approval Letter to prevent data discrepancies.

II. During Inspection

On-site observation to ensure that the actual destruction takes place. The destruction methods must strictly follow the approved guidelines—such as cutting, grinding, or crushing—to ensure the assets are completely decommissioned.

III. Post-Inspection

Verification of the residue after the process is complete. An inspection report is then issued to certify that the assets or materials can no longer be reused or recirculated. This report serves as the final document for the BOI account closure process.

 

If you require expert advice regarding Scrap Inspection or Machinery Destruction Inspection under BOI regulations, contact us for more information:

☎️ Tel.: 0-2348-3355-9, 0-2105-4510

✉️ Email: [email protected]