In a significant move to strengthen the country’s digital economy, the Thai Cabinet approved, in principle, a new tax incentive on June 24, 2025, aimed at supporting the digital transformation of small and medium-sized enterprises (SMEs). This measure, introduced via a draft Royal Decree under the Revenue Code, is part of the government’s strategic effort to enhance the competitiveness of the SME sector and promote national digital development.
This initiative represents an expansion of Royal Decree No. 725 B.E. 2564 (2021), which expired in 2022. The updated scheme widens the scope of eligible digital expenditures and introduces enhanced fiscal benefits to better address the needs of businesses in the digital age.
Key Objectives of the Incentive
The tax incentive is designed to serve three main purposes:
1. Encouraging Digital Adoption: To incentivize SMEs to integrate digital tools and technologies that improve operational efficiency and productivity.
2. Expanding Deductible Expenses: To include a broader range of digital services and products that are relevant to today’s evolving technological landscape.
3. Supporting National Digital Policy Goals: To align SME development with Thailand’s broader digital economy strategy, fostering innovation, sustainability, and growth.
| Terms | Definitions |
| Software | Refers to applications and programs designed for business operations, including enterprise resource planning (ERP), embedded systems, big data analytics, and platforms for managing or controlling advanced technologies. |
| Hardware | Physical computing equipment such as central processing units (CPUs), monitors, printers, scanners, and other peripherals essential for digital operations. |
| Smart Devices | Electronic devices equipped with interactive, automated, and connectivity features—typically via Bluetooth, Wi-Fi, or 5G—used to support business processes and digital integration. |
| Digital Services | Platform-based technology solutions that facilitate transactions or interactions between service providers and users, including fully integrated digital management and operational systems. |
Eligibility and Conditions
To qualify for the incentive, businesses must meet specific criteria:
✓ Be a company or registered partnership;
✓ Have paid-up capital not exceeding THB 5 million at the end of the accounting period;
✓ Generate no more than THB 30 million in revenue from the sale of goods or provision of services during the fiscal year;
✓ Not have previously utilized similar tax incentives under other Royal Decrees;
✓ Not be receiving benefits under the Investment Promotion Act, the National Competitiveness Enhancement Act, or the Eastern Economic Corridor (EEC) Law.
Tax Benefit Offered
Qualifying SMEs will be entitled to a 200% tax deduction on eligible digital expenditures, capped at THB 300,000. This means that SMEs can deduct the full expense amount plus an additional 100% of that amount from their taxable income.
Eligible expenses include:
✓ Purchase or rental of software;
✓ Purchase or rental of hardware and smart devices;
✓ Subscription or usage fees for digital services offered via licensed platforms.
It is important to note that general-purpose computers (e.g., laptops, desktops) are excluded. Only digital products and services that are registered with the Digital Economy Promotion Agency (DEPA) will qualify for this incentive. The incentive is available for expenditures incurred up until December 31, 2027.
Oversight and Administration
The Ministry of Digital Economy and Society (MDES) will oversee implementation and compliance in collaboration with the Ministry of Finance. MDES is responsible for:
✓ Promoting awareness of the scheme among SMEs;
✓ Supporting eligible businesses through education and guidance;
✓ Coordinating with the Ministry of Finance to submit annual reports evaluating the scheme’s fiscal and economic impact, in line with the State Fiscal and Financial Discipline Act B.E. 2561.
Projected Economic Impact
While the projected annual tax revenue loss is estimated at THB 8 million, the government expects far-reaching positive effects on the Thai economy. Approximately 600 SMEs are expected to benefit initially from the program.
The broader anticipated outcomes include:
✓ Improved SME Efficiency: By lowering the cost of digital investment, the scheme enables businesses to modernize their operations, streamline internal processes, and improve customer service and supply chain management.
✓ Enhanced Competitiveness: Digital transformation is a critical factor in improving the agility and global competitiveness of SMEs, allowing them to expand beyond domestic markets.
✓ Boost to Local Tech Sector: Since qualifying products must be registered with DEPA, the program will also stimulate demand for local digital service providers, fostering innovation and job creation within the tech ecosystem.
Compliance Considerations
Despite the promising benefits, SMEs should be mindful of compliance obligations. Key challenges include:
✓ Pending Clarifications: As official implementation guidelines from the Revenue Department are yet to be issued, businesses must prepare for adjustments once further details are released.
✓ Vendor Verification: Companies must ensure that the services and products they use are DEPA-registered to qualify for the deduction.
✓ Audit Readiness: Proper documentation and categorization of expenses will be essential to pass potential tax audits and to claim the deduction successfully.
How MPG Can Support
At Mahanakorn Partners Group (MPG), we offer comprehensive support for SMEs seeking to take advantage of this incentive. Our services include:
✓ Assessing business eligibility and identifying qualifying expenditures;
✓ Advising on optimal digital structuring for tax efficiency and compliance;
✓ Assisting with vendor verification and documentation for tax filings;
✓ Interpreting forthcoming regulations and providing updates;
✓ Drafting contracts and reviewing digital service agreements to ensure alignment with incentive conditions;
✓ Liaising with MDES, DEPA, and the Revenue Department for clarification and guidance;
✓ Offering tailored legal briefings, training sessions, and dispute resolution services as needed.
Thailand’s new tax incentive for SME digital transformation represents a critical step toward equipping local businesses with the tools they need to thrive in a digital-first world. With the right preparation and strategic advisory, eligible companies can significantly reduce their tax burden while modernizing operations. As trusted advisors, MPG is ready to guide SMEs through every step of this opportunity to ensure maximum benefit and compliance.
For more information or to schedule a consultation, please contact us at [email protected].