On 22 June 2020, Thailand Tax Royal Decree (No 695) was gazetted, prescribing an additional corporate tax deduction concession for purchases of machinery.

This Tax Insight updates you about this additional tax deduction concession.

The Corporate Tax Deduction Concessions

Under Royal Decree (No 690)

For purchases of machinery assets from 01 Sep 2019 to 31 May 2020, a corporate tax deduction concession of 150% of the purchase costs, as follows:

• The usual 100% deduction (as depreciation of the asset costs); plus
• An additional 50% deduction (also as depreciation of the asset costs).

Under Royal Decree (No 695)

For purchases of machinery assets from 01 Jan 2020 to 31 Dec 2020, a corporate tax deduction concession of 250% of the purchase costs, as follows:

• The usual 100% deduction (as depreciation of the asset costs); plus
• An additional 150% deduction (also as depreciation of the asset costs).

Rules, Procedures and Conditions

The rules, procedures and conditions prescribed in both Royal Decrees (690) and (695) are that:

1. The tax deduction concession does not apply to businesses that purchase machinery assets for renting or leasing out;
2. The assets shall have never been used before;
3. The assets shall be purchased and ready for use by 31 Dec 2020;
4. The assets shall be situated in Thailand;
5. The assets shall not be entitled to any tax concession under another Royal Decree, in whole or in part;
6. The assets shall not be purchased for businesses exempt from corporate tax under the law governing investment promotion, or the law governing targeted Industries, or the law governing the Eastern Economic Corridor;
7. The corporate entity claimant shall provide details of the investment plan and payment plan to the Revenue Department; and
8. The corporate entity claimant shall comply with the Revenue Departments additional rules, procedures and conditions.

Caution​

Whilst these Royal Decrees provide rights to tax deduction concessions they also prescribe obligations to comply with rules, procedures and conditions.

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.

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