Tax News Flash Issue 10

Tax News Flash Issue 10

Corporate income tax : Tax Deductions


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Corporate income tax : Tax Deductions

Extension of Additional Tax Deductions for New Capital Expenditure until 31 December 2017

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 – 31 December 2016.  On 24 January 2017, the Cabinet provided their approval to extend this tax incentive for one more year. Therefore, expenditure incurred on eligible assets during the period 1 January 2017 – 31 December 2017 will qualify for the additional deduction, however, such deduction has been reduced from 100% to 50%.

The 50% additional deduction, which applies over and above the normal tax depreciation that can be claimed on assets, shall apply as follows:

— For expenditure incurred on the cost of new assets actually paid for within the 2017 year, provided the asset is ready for use before 31 December 2017. In the case of machinery and permanent buildings, an exception is allowed where the assets need only be ready for use after 31 December 2017; and 

— For expenditure incurred on the remaining cost of assets acquired in the 2016 year and the 100% additional deduction has been claimed, provided the cost is actually paid for in the 2017 year.


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 of Director Generals will equally apply to the extension of the tax incentive. This will be clarified once the new Royal Decree is issued. 

The nature of eligible assets and their write off periods under the existing Royal Decree No 604 are summarized below:

  • Machinery, parts, equipment, tools, appliance, furniture – 5 years;
  • Computer programs – 3 years;
  • Vehicles (excluding passenger cars, except where such passenger cars are leased as part of the taxpayer’s business) – 5 years; and
  • Permanent buildings (excluding land and permanent building for residential purposes) – 20 years.

We will update readers once the Royal Decree and the detailed notifications are issued.

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