Selling BOI machinery? Write-off isn't disposal approval

01Two different clocks, not one

A common shorthand among Chinese-invested manufacturers is "BOI duty-exempt machinery can't be touched during the lock-in period" — but that folds two separate rules into one. One rule governs use and site location: the promotion committee sets a lock-in period on the certificate, during which the machine cannot be repurposed or moved out of the registered site without prior approval. The other governs whether import duty must be repaid on disposal — a separate liability period that runs from the import date; once it has elapsed, disposal no longer triggers a duty repayment, and if it has not, duty is repaid first, then the write-off is processed.

02What this means in practice

Don't tell a client "once the lock-in period is over, you're free." The more accurate framing is: "the duty-liability period determines whether disposal triggers a repayment; the use/site restriction is a separate period set out on your certificate." A machine imported many years ago may already be past its duty-liability period, but if the certificate's lock-in period runs longer, repurposing it or moving it still requires prior approval. Both periods, and their starting points, are set out in the certificate terms and the notices currently in force — not something to assume from memory.

03Two approvals, not one: write-off does not mean disposal is allowed

This is the easiest trap to fall into. Writing a machine off the duty-exempt register and getting approval to remove it from the project — so it can actually be sold, transferred, or scrapped — are two separate approvals, not two names for the same thing. Once write-off is approved, the machine must still remain in use for the project until removal from the project is separately applied for and approved. Treating "write-off approved" as "cleared to dispose" is the single most common misreading of this process — acting on that assumption and selling or dismantling the machine before removal is approved means the steps were taken in the wrong order.

04Disposing of a main production machine: line up the replacement first

If the machine being disposed of is a main production machine, the disposal cannot bring the project's maximum capacity below a floor tied to the promoted capacity. Once capacity falls below that floor, replacement-machine procurement and technical documentation must be prepared and filed together with the removal application.

The most common mistake when upgrading a production line is to sell the old machine first to free up space, then go shopping for the replacement — by then the machine is already gone, capacity has already dropped below the floor, and the replacement paperwork isn't ready, so the removal application stalls. The correct order runs the other way: line up the replacement-machine documentation first, confirm it covers the capacity gap, then apply for removal and dispose of the old machine.

05Mortgage, donation, destruction, repurposing, relocation — each needs its own approval, and approval isn't the same as risk gone

Mortgaging, hire-purchase/leasing, donation, destruction, repurposing, and relocation each require a separate application and approval. One connection here is easy to miss: an approved mortgage application does not make the underlying tax risk disappear — what gets approved is permission to mortgage the machine, not immunity from duty repayment if a non-promoted mortgagee forecloses during the lock-in period (for example, after a loan default). These are two separate things to spell out when negotiating financing — an approved mortgage should not be read as "this machine carries no further tax risk."

06When a case doesn't fit any of the standard categories

Situations that don't fit the standard approval categories — a machine damaged by flood or fire, or a change of ownership from a parent-company restructuring — are not automatically "not allowed just because there's no matching rule." The current framework leaves a case-by-case discretion with the relevant authority. Processing time for this route isn't fixed, and it's worth engaging advisers early to prepare the supporting explanation rather than only after the machine has already been disposed of.

Whether a specific machine is still inside its lock-in period, whether it counts as a main production machine, how the capacity floor and replacement documentation should be prepared, and how the mortgage risk should be written into financing terms — all need to be checked against your certificate terms and the notices currently in force. Our advisers generally recommend a review before a machine is actually sold or dismantled, rather than after the fact — the cost of fixing the paperwork afterward is considerably higher.