On 15 August 2023, Thailand Tax Royal Decree (No 776) was gazetted, which extends the corporate tax deduction concession for automation costs.

This Tax Insight has been updated for the prescriptions in RD (No 776).

Royal Decree (No 776) extends the Government's encouragement of corporate entities to invest in automation systems under Royal Decree (No 738) that was originally issued for the 2021 to 2022 years by amending the applicable dates therein to be for the 2021 to 2025 years, as follows:

The Tax Deduction Concession under RD (No 738)

Applicability

From 01 January 2021 to 31 December 2025*.

* As amended by Royal Decree (No 776) gazetted on 15 Aug 2023.

The Tax Deduction Concession

For machinery and computer program purchases for automation systems, a corporate tax deduction concession of 200%, as follows:

• The usual 100% deduction (as depreciation of the costs); plus
• An additional 100% deduction (also as depreciation of the costs).

Rules and Conditions

The rules and conditions prescribed in Royal Decree (No 738) are:

1. The machinery and computer program assets shall:

1. Be used for an automation project certified as required by the Revenue Department;
2. Have never been used before;
3. Be assets that are entitled to depreciation deductions under Section 65 bis (2) of the Revenue Code and purchased and ready-for-use by 31 Dec 2025*;
4. Be situated in Thailand;
5. Not be assets entitled to any other tax concession under any other Royal Decree, in whole or in part; and
6. Not be assets of a businesses that is exempt from corporate tax under the law governing investment promotion, the law governing targeted industry enhancement or the law governing the Eastern Economic Corridor.

2. The corporate entity claimant shall:

1. Provide details of the automation system project and the payment plan for same to the Revenue Department; and
2. Comply with the Revenue Department's additional rules and conditions.

* As amended by Royal Decree (No 776) gazetted on 15 Aug 2023.

Caution

If the Revenue Department's tax audit officers find any of the rules, procedures or conditions have not been met, the entitlement to the concession may be lost, and back-taxes plus penalty and surcharge could be payable.

---