Tax News Flash Issue 102

On 25 May 2021, the Cabinet approved the principles of four draft Royal Decrees issued under the Revenue Code regarding tax measures to support human resource development for Industry 4.0, and to extend tax benefits provided for the ‘Thailand Plus Package’, which encourages foreign investors to relocate production bases to Thailand and increases Thailand’s competitiveness. For companies or juristic partnerships, these tax measures will provide relevant tax exemptions and additional tax deductions on certain expenses incurred from 1 January 2021 to 31 December 2022.

A summary of each measure is set out below.

• Tax measure to support human resource development for Industry 4.0, which allows an additional deduction of 200% of expenses incurred through the donation of machines, parts or equipment and computer software used for an Industry 4.0 automatic system. The said donations must be made to a Human Resource Development for Industry 4.0 Promotion Center founded by a government educational institution, private university, or private school, excluding non-formal school, from 1 January 2021 to 31 December 2022. Exemptions of value added tax and corporate income tax are also provided for these donations where the cost of donated assets is not required to be included as a deductible expense for the calculation of taxable profits. 
• Tax measure to promote investment in automated systems, which allows an additional deduction of 100% of expenses incurred through investments in automatic machines and software used for the automated systems investment project. This additional deduction does not include expenses incurred from the repair of such machines.
• Tax measure to encourage the employment of highly skilled personnel, which allows an additional deduction of 50% of expenses incurred from the payment of salaries, not exceeding a maximum salary of THB 100,000, paid to highly skilled employees in the areas of science, technology, engineering and mathematics who are under employment between 1 January 2021 to 31 December 2022.
• Tax measure to encourage employee development, which allows an additional deduction of 150% of expenses incurred from sending employees on training courses certified by specified authorities.

The Royal Decrees and supplementary regulations associated with these measures are expected to be announced soon.