Thailand: Additional tax deduction, incentive for new capital expenditures

Thailand: Additional tax deduction

In Thailand, guidance was issued providing additional deductions with respect to investments and capital investment spending for certain assets. To be eligible for the tax incentive, the expenditure must be made with respect to assets during the period 3 November 2015 - 31 December 2016.

Related content

The new measures provide that, in addition to the standard depreciation that can be claimed on assets for tax purposes, a tax deduction for costs incurred by a taxpayer to acquire, expand, change or improve (but not repair) an eligible asset can be claimed as a tax deduction, with this additional deduction to be apportioned over a number of years (the additional deduction will be spread over a certain number of years depending on the nature of the asset, beginning from the first year in which the asset is ready for use). 


Assets eligible for the new deduction and the period of years over which the additional deduction can be claimed are as follows:

  • Machinery, parts, equipment, tools, appliance, furniture—five years
  • Computer programs—three years
  • Vehicles (excluding passenger cars, except when such passenger cars are leased as part of the taxpayer’s business)—five years
  • “Permanent” buildings (excluding land and permanent building for residential purposes)—20 years 

The following criteria must also be met:

  • The asset must be unused.
  • The asset must qualify for tax depreciation and be acquired and ready for use before 31 December 2016.
  • The asset must be physically located in Thailand (except for vehicles).
  • The asset must not, wholly or partly, fall under any tax privilege provided by any Royal Decree issued under the tax law.
  • The asset and the taxpayer must not, wholly or partly, fall under any tax privilege regime provided by the Board of Investment (BOI), except when the promoted project is under an investment acceleration and the promoted company opts not to claim the benefits under such investment acceleration.
  • The purchasing contract or a similar agreement for the assets must be entered into during the period 3 November 2015 - 31 December 2016, and in the case of “permanent” buildings, the construction license must be submitted to and approved by the relevant authority during this same period.

KPMG observation

The guidance issued by the tax authorities is not clear, but informal conversations with officials with the Revenue Department indicate that the additional deduction will not be available unless the costs incurred are actually paid during the period 3 November 2015 - 31 December 2016 (i.e., the deduction would not be available on an accrual basis).  It also is understood that the additional deduction does not need to be apportioned on a monthly basis from the date the asset is ready for use in a specific tax year.  When a taxpayer has already submitted its 2015 tax return without having taking advantage of the additional, eligible deduction, the taxpayer may want to consider filing an amended return. When a taxpayer is weighing an investment in eligible assets, the taxpayer may want to consider structuring the acquisition (and the payment) to take place before 31 December 2016 in order to take advantage of the additional deduction provided under this new tax measure.


Read a 2016 report prepared by the KPMG member firm in Thailand

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