Navigating Income Tax Exemption for Investments in Electronic Systems and Services

The Director-General of the Revenue Department has issued a set of comprehensive rules, procedures, and conditions, thereby heralding a new regime of corporate income tax exemption for investments in electronic data preparation systems, electronic data receiving systems, tax submission systems, as well as service fees disbursed to electronic data preparation service providers, electronic data remittance service providers, and tax remittance service providers. These provisions have been outlined in the Director-General’s Announcement on Income Taxes (No. 435), dated 28th June 2023, and are slated to become effective from 1st January 2023.

Beneath the purview of this noteworthy directive, a series of criteria must be diligently satisfied for an entity to avail of the income tax exemption. Specifically, companies or juristic partnerships are eligible for exemption on income equivalent to 100% of expenses incurred for the investment in a diverse spectrum of electronic systems. These include electronic data preparation systems, electronic data receiving systems, and tax remittance systems designated for withholding income tax, income tax, or value-added tax. Moreover, the exemption also encompasses expenses related to the procurement of computer programs, electronic certificate storage devices, computers, or any other ancillary devices utilized in conjunction with computers.

In order to qualify for this exemption, eligible entities are required to adhere to the following criteria:

a)   The expenses should pertain to investments made within the timeline from 1st January 2023 to 31st December 2025.

b)   The right to exemption shall be exercised based on actual disbursements during the accounting period that marks the initiation of property depreciation.

c)   An exhaustive report delineating the installation and subsequent uninstallation of these electronic assets must be prepared, facilitating assessment by authorized officials.

d)   A comprehensive report outlining the installation and uninstallation of said assets must be made available for scrutiny by appointed officers.

Furthermore, companies or juristic partnerships are entitled to income tax exemption for the entirety of expenses incurred in paying service fees to electronic data preparation service providers, electronic data remittance service providers, tax remittance service providers, as well as electronic certificate service fees and fees associated with the utilization of electronic storage space. Such expenses should be in direct pursuit of the production, delivery, receipt, and retention of electronic tax invoices, electronic receipts, and tax remittances. It is imperative to note that these expenditures must be disbursed between 1st January 2023 and 31st December 2025, and must be substantiated by tangible evidence validating payment to the respective service providers.

It is mandated that qualifying entities fulfill their duty of notifying investment and payment particulars via the electronic system of the Revenue Department prior to the submission of a tax return for the relevant accounting period. This notification process must be completed no later than 31st May 2026.

Importantly, any company or juristic partnership that avails of the income tax exemption but subsequently fails to adhere to the regulatory stipulations of the Royal Decree (No. 766), B.E. 2566, shall be obligated to incorporate the previously exempted income while computing net profit for income tax purposes in the corresponding accounting period in which the exemption was granted.

Table. List of investments and payments in accordance with the Royal Decree on Tax Exemption (No. 766), B.E. 2566.

Tax Exemption Measures Enhancing Real Estate Investment through REITs in Thailand

Unlocking Tax Benefits: Exploring Thailand’s Three New Decrees for Income Tax Exemption

Income Tax Exemption for Community Enterprises