On 24 June 2025, the Thai Cabinet approved a suite of tax incentive measures proposed by the Ministry of Energy to accelerate energy conservation and the adoption of renewable energy across households and businesses. These measures are integral to Thailand’s broader climate strategy, which targets carbon neutrality by 2050 and net-zero greenhouse gas emissions by 2065.
The incentives are designed to lower energy consumption and production costs by offering significant tax deductions for investments in energy-efficient equipment and solar rooftop systems. Implementation and oversight will be carried out by the Department of Alternative Energy Development and Efficiency (DEDE), in close coordination with the Ministry of Finance and the Revenue Department.
Key Tax Incentives Approved
1. Additional Tax Deduction for Energy-Efficient Equipment and Materials
This measure promotes private-sector and individual investment in certified high-efficiency machinery and building materials.
Eligible Taxpayers:
✓ Individuals earning income under Sections 40(5)–(8) of the Revenue Code (e.g., professionals, contractors, business owners); and
✓ Juristic persons (companies and registered partnerships).
Incentive: An additional tax deduction of 50%, for a total deduction of 150% of the actual expenditure on qualifying energy-saving equipment and materials.
Key Conditions:
✓ Equipment must bear a 5-star Energy Efficiency Label issued by DEDE or an equivalent certification recognized by the authority;
✓ Assets must be new, unused, located in Thailand, and operational by 31 December 2028;
✓ Cannot overlap with tax privileges granted under other schemes (e.g., BOI or EEC) for the same assets;
✓ A valid full-format VAT invoice must be issued and submitted through the e-Tax invoice system.
DEDE will release an official list of eligible equipment and additional guidelines through ministerial regulation.
2. Personal Income Tax Deduction for Residential Rooftop Solar Installations
To accelerate renewable energy adoption at the household level, the Cabinet has endorsed a personal income tax deduction for the installation of on-grid solar rooftop systems.
Eligible Taxpayers: Non-juristic individual homeowners who install rooftop solar systems with a maximum capacity of 10 kilowatt-peak (kWp).
Incentive: A deduction of up to THB 200,000, inclusive of VAT, based on the actual installation cost.
Key Conditions:
✓ Taxpayer must be classified as a Type 1 electricity user (residential);
✓ The name of the taxpayer must match the registered name on the electricity meter;
✓ Only one individual per household may claim the deduction;
✓ The solar system must be approved for grid connection by the relevant electricity authority;
✓ A full-format VAT invoice is required for documentation.
Validity Period: This incentive is available through 31 December 2027.
Legislative Developments: Solar Energy Promotion Act (Draft)
The Ministry of Energy has indicated its intention to submit a draft Solar Energy Promotion Act to the Cabinet in the coming weeks. The proposed legislation aims to further support renewable energy initiatives, including the local manufacturing and certification of Thai-made solar inverters. This Act is expected to lay the regulatory foundation for long-term investment in solar infrastructure and domestic innovation in clean energy technologies.
Projected Economic and Environmental Impact
Despite the estimated fiscal cost of THB 27.96 billion, the Thai government anticipates considerable long-term economic and environmental benefits.
Impact of Energy-Efficient Equipment Deduction:
✓ Estimated economic stimulation of THB 254 billion;
✓ Annual electricity savings of 30.3 billion kilowatt-hours (kWh);
✓ Reduced LNG imports worth THB 110 billion;
✓ Annual reduction of 15.34 million tons of CO₂ emissions.
Impact of Residential Solar Incentive:
✓ Economic contribution of THB 20.25 billion;
✓ Annual electricity savings of 585 million kWh;
✓ LNG import reduction valued at THB 2.1 billion;
✓ Annual reduction of 2.64 million tons of CO₂ emissions.
Strategic Implications for Thai Businesses
1. Reduced Operating Costs: Businesses investing in high-efficiency equipment or solar infrastructure can expect substantial energy cost savings, enhanced competitiveness, and favorable tax positioning.
2. Investment Incentives for SMEs: The generous deductions lower the upfront capital burden, encouraging small and medium-sized enterprises to modernize operations and adopt clean technologies.
3. ESG Advancement: The policy aligns with Environmental, Social, and Governance (ESG) principles—vital for attracting capital, forming partnerships, and meeting stakeholder expectations.
4. Clean Tech Ecosystem Growth: Rising demand for certified high-efficiency equipment and solar components is likely to stimulate domestic innovation and employment within the Thai clean energy supply chain.
Potential Compliance Challenges and How MPG Can Help
While the incentives offer substantial opportunities, businesses and individuals may face certain implementation hurdles:
Common Challenges:
✓ Uncertainty regarding eligible equipment or qualifying services;
✓ Overlap or conflict with existing BOI/EEC investment promotion schemes;
✓ Invoicing and certification complexities;
✓ Legal risks associated with grid connections for leased or jointly owned properties;
✓ Unclear timelines or criteria pending ministerial regulation.
MPG’s Energy and Tax Law Team Provides:
✓ Eligibility Assessments and strategic tax planning;
✓ Regulatory Compliance Guidance aligned with DEDE and Revenue Department requirements;
✓ Contract Structuring for clean energy investments;
✓ ESG Reporting and Carbon Strategy Support;
✓ Government Liaison Services to resolve disputes or seek clarifications from authorities.
For personalized legal and tax guidance to optimize your energy-related investments, please contact us at: [email protected]
Disclaimer: This publication is intended for general informational purposes only and does not constitute legal, tax, or investment advice. The information herein is based on official Cabinet resolutions and announcements as of June 2025. Specific implementing regulations are expected and may affect eligibility or compliance requirements. Readers are advised to consult with qualified professionals for case-specific guidance.