On 24 Feb 2016, Royal Decree (No 598) was gazetted, providing incentives for corporate entities to invest more in R&D activities, beginning with a 300% tax deduction concession incentive for the 2015-2019 years.

This Insight summarizes the corporate tax deduction concession incentives for R&D costs under Royal Decree (No 598).

The Tax Deduction Concessions

From 01 Jan 2015 to 31 Dec 2019

For corporate entities incurring expenses on hiring an Authorized R&D Agency to undertake research, development or innovation activities for the corporate entity between the dates of 1 Jan 2015 and 31 Dec 2019, a tax deduction concession for 300% of the costs, that is:

• The normal or usual 100% deduction for the R&D costs; plus
• An additional 200% deduction for the R&D costs, but not more than the following capped amounts for the additional deduction:

	For that part of total revenues not exceeding 50 million Baht		60% of that revenue amount
	For that part of total revenues exceeding 50 million Baht but not exceeding 200 million Baht		9% of that revenue amount
	For that part of total revenues exceeding 200 million Baht		6% of that revenue amount

From 01 Jan 2020

For corporate entities incurring expenses on hiring an Authorized R&D Agency to undertake research, development or innovation activities for the corporate entity from the date of 01 Jan 2020, a tax deduction concession for 200% of the costs as follows:

• The normal or usual 100% deduction for the R&D costs; plus
• An additional 100% deduction for the R&D costs.

Rules and Conditions

The rules and conditions prescribed in Royal Decree (No 598) for claiming the tax deduction concessions are as follows:

1. The expenditure shall be paid to an Authorized R&D Agency*;
2. The additional rules, procedures and conditions of the Ministry of Finance shall be complied with; and
3. A corporate entity claiming a tax deduction concession under this Royal Decree shall not also claim any tax rights or benefits for a BOI-promoted project under the Investment Promotion Act, in whole or in part.

* An Authorized R&D Agency is a government or private organization, which has applied to and received approval from the Director-General of Revenue.

Caution​

Whilst Royal Decrees provide rights and entitlements to tax 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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