The BOI 36-month deadline to start operations, and how to back-plan it

01Three countdowns that start on the certificate date

Three countdowns begin on the day the certificate is issued. Owners usually remember only that they have to start operations, and miss the fact that starting operations depends on the first two chains running through first: the equipment has to arrive, the line has to run, and there has to be real output before there is anything to apply for an inspection on.

• The duty-free equipment import window. Machinery imported free of import duty has to be imported within the period allowed. Past that date, those items no longer carry the exemption.
• Progress towards first revenue. The promoted business has to produce its first revenue within the period allowed, and this is looked at quarter by quarter in the project progress report.
• The start-of-operations inspection. The project must complete construction, meet the conditions it committed to, and apply for the start-of-operations inspection within 36 months of the certificate date.

The three run from the same day but are approved through different channels. An extension of the equipment import window, an explanation of first-revenue progress, and an extension of the operations deadline go to different desks — one application does not settle all three. If you need more time, you apply for each separately, and in every case before the date falls. More on the equipment import window.

02Why 36 months is often not enough

Thirty-six months sounds generous. What eats the time is usually not the construction itself.

• Land and buildings. Site selection, the lease or land purchase, the building permit, the construction permit — rework at any one of these steps costs months.
• Machine list approval and delivery. Duty-free equipment has to clear the machine list approval before shipment can be arranged, and if the list and the purchase contracts do not match, the list has to be amended — each amendment is a matter of weeks. Sea freight, customs clearance, installation and commissioning add another layer on top.
• Trial production to stable output. First revenue means a real commercial transaction, not a trial sample. If the line will not run steadily, the first order does not go out.

String these together and the time left for actually building the plant is often half of what was on paper.

One separate anchor worth keeping straight: corporate income tax exemption runs from the date of first revenue, not from the certificate date.

03Back-planning: lock four milestones from the end

Do not schedule forward from today. Work backwards from the 36-month date and lock four milestones.

• Milestone four (month 36). File the start-of-operations application. Leave room ahead of it for inspection preparation and for supplementary documents.
• Milestone three. First revenue from the promoted business is booked, with revenue documentation that can be verified.
• Milestone two. Equipment complete, installation and commissioning done, line running steadily. Further back still, the duty-free machine list must already have been approved.
• Milestone one. Buildings handed over and utilities connected. Ahead of that sit the building permit and the construction period itself.

Leave a buffer in front of each milestone — in our experience one to two months for every milestone that depends on a third-party approval. The schedule that comes out of this is the master plan for your three years.

04What to do when you can see you will not make it

What matters is acting before the date, not after it. Each of the three deadlines has its own extension or explanation channel, but they share one precondition: you have to raise it within the period, with the objective reasons for the delay and a new completion plan. Once the date has passed, there is much less room to work with.

In practice the steadiest approach is to put the three countdowns on a single board the project team sees, and update actual progress against plan once a month. The moment any one of them slips by more than two months, start assessing an extension — rather than dealing with it when the quarterly report raises the question. What has to be filed after the certificate.

Which date your own project counts from, how much slack is left against each of the three, and whether extension material should be prepared now all have to be checked item by item against your certificate date, your construction and procurement schedule, and the approval status of the machine list. This kind of back-planning is usually worked out once in full by our advisers and then handed to the project team to execute — more reliable than each department planning its own leg. What the BOI filing engagement covers.