On September 23rd, 2020, three Royal Decrees granting corporate income tax deductions for investment in automation systems and robotics, the hiring of STEM employees, and employee training were promulgated in the Government Gazette. The Royal Decrees took effect on September 24th, 2020.
Royal Decree Issued under the Revenue Code Governing Tax Exemption (No. 710), B.E. 2556
Eligible companies and juristic partnerships are entitled to an additional corporate income tax deduction of 100% of the costs for investment in automation systems and robotics, for depreciation of an asset. The exemption is only applicable to investments in automation systems made during the period between 1 January 2019 and 31 December 2020.
The periods for two previously granted additional deductions for machinery purchase costs, Royal Decree No. 690 and No. 695, are respectively set to expire on 31 May 2020 and 31 December 2020. Unlike the two aforementioned deductions, the additional deduction provided by Royal Decree No. 710 only applies to purchase costs for machinery and computer programs for automation systems.
In order to be eligible for exemptions under Royal Decree No. 710, machinery and computer programs for automation systems must comply with the following requirements:
1. The machinery and computer programs must be certified by an institute designated by the Revenue Department.
2. The assets have never been used before.
3. The assets are entitled to deduct costs for the wear and depreciation of property under Section 65 bis (2) of the Revenue Code.
4. The assets are in a condition ready for use by 31 December 2020.
5. The assets are located in Thailand.
6. The assets are not entitled to any tax deduction under another Royal Decree, either in whole or in part.
7. Businesses exempt from corporate income tax under the law governing investment promotion, targeted industry businesses, or Eastern Economic Corridor businesses are not eligible.
In order to claim the deduction, companies must:
1. Submit an investment plan for automation systems and robotics, as well as a payment plan, to the Revenue Department.
2. Comply with the terms and conditions under additional regulations to be issued.
In any accounting period, if the company or juristic partnership fails to comply with the Revenue Department’s conditions, or the machinery does not satisfy the above criteria, the tax benefit will be revoked and tax returns from the relevant accounting period will need to be re-filed. If the machinery is sold, damaged or no longer exists, the tax benefit will end in the accounting period in which any of these events occur, and there will be no need to re-compute the tax benefit.
The Machinery Registration Act B.E. 2514 (1971) defines machinery as anything which consists of a part that either generates, converts or delivers energy; however, this definition does not include vehicles registered under the Motor Vehicle Act B.E. 2522 (1979). Under the Royal Decree No. 710, an “automation system” is defined as a system which involves two or more machines operating jointly with each other via automatically received commands from computer programs, and data connections with such computer programs
Royal Decree Issued under the Revenue Code Governing Tax Exemption (No. 711), B.E. 2556
Companies and juristic partnerships may claim an additional 50% corporate income tax deduction for expenses paid as wages and salaries to highly-skilled employees in STEM fields (Science, Technology, Engineering, and Mathematics) between 1 January 2019 and 31 December 2020. Eligible expenses are capped at THB 100,000 per month. Combined with the normal 100% deduction, companies may claim a total 150% deduction for the actual amount of expenses incurred during the period prescribed by Royal Decree No. 711.
In order to claim the deductions, the company or juristic partnership must be a targeted industry business under the relevant law.
The eligible expenses for salaries and wages must meet the following conditions:
1. The salaries and wages must be paid to employees certified as highly-skilled persons in STEM fields by an institute designated by the Revenue Department.
2. The employees must commence work under a labor contract between 1 January 2019 and 31 December 2020.
3. The employees may not be employees of the company for at least one year prior to the commencement of work between 1 January 2019 and 31 December 2020.
Royal Decree Issued under the Revenue Code Governing Tax Exemption (No. 712), B.E. 2556
Companies and juristic partnerships are entitled to an additional 150% corporate income tax deduction for costs incurred between 1 January 2019 and 31 December 2020 for the purposes of employee training and education. Combined with the normal 100% deduction, companies may claim a total 250% deduction for the actual amount of expenses incurred during the period prescribed by Royal Decree No. 712.
The eligible expenses for staff training must meet the following conditions:
1. The expenses are incurred by sending employees to attend accredited educational courses designated by the Revenue Department.
2. Businesses exempt from corporate income tax under the law governing investment promotion, targeted industry businesses, or Eastern Economic Corridor businesses are not eligible.