Thailand: Deduction for new capital expenditures extended to 31 December

Thailand: Deduction for new capital expenditures

A 50% additional deduction that applies in addition to the standard tax depreciation that can be claimed on new capital assets will apply through 31 December 2017. However, the additional deduction has been reduced to 50% for expenditures made during 2017.

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The additional 50% additional deduction applies:

  • For expenditures incurred on the cost of new assets actually paid for within 2017 (provided the asset is ready for use before 31 December 2017, but if machinery and permanent buildings, the assets need only be ready for use after 31 December 2017) 
  • For expenditures incurred on the remaining cost of assets acquired in 2016 and the 100% additional deduction has been claimed, provided the cost is actually paid for in 2017

It is expected that the criteria and write-off period for eligible assets, as well as all the other conditions under Royal Decree No 604 and related notifications, will also apply to the extension of the tax incentive. This will be clarified once a new Royal Decree is issued.

Background

In May 2016, the Thai government issued Royal Decree No 604 to promote and incentivize capital spending on certain eligible assets, provided the expenditure in respect of such assets was incurred during the period 3 November 2015 through 31 December 2016.  On 24 January 2017, the Cabinet provided approval to extend this tax incentive for one more year. Therefore, the expenditure incurred on eligible assets during the period 1 January 2017 - 31 December 2017 will qualify for the additional deduction; however, the deduction has been reduced from 100% to 50%.

 

Read a January 2017 report prepared by the KPMG member firm in Thailand

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