Additional deduction for an investment in new machinery
In June 2020, the Government issued Royal Decree No. 695 to allow a company or legal partnership to claim a corporate income tax deduction of 2.5 times (1 time as a normal deduction of depreciation and 1.5 times as an additional deduction) for investments made in new machinery between 1 January 2020 and 31 December 2020 under the rules, procedures, and conditions specified by the Director-General of the Revenue Department.
Keywords: Mazars, Thailand, Tax, Royal Decree, Corporate income tax, Revenue Department, Investment, Tax incentive
18 February 2021
Under this Royal Decree, machinery eligible for the additional deduction is defined as objects consisting of several parts assembled for use in generating energy, converting or transforming energy, or transmitting energy by using water, steam, fuel, wind, gas, electricity, or any other power or a combination of several types of power. It also includes equipment, flywheels, pulleys, belts, shafts, gears, or other things arranged for reciprocating force, but does not include vehicles that must be registered as such.
However, news published by the Legal Division of the Revenue Department divide components of machinery as follows:
- It is an object that consists of several parts; and
- It is used to generate energy, convert or transform energy, or transmit energy by using water, steam, fuel, wind, gas, electricity or any other power or a combination of several types of power.
Therefore, any asset which meets these two criteria and is not a vehicle that must be registered under the law would be considered a machine under this Royal Decree. It is not necessary for such an asset to be a machine used for the production of goods or a machine that must be registered in accordance with the law on machinery registration.
For example:
- Washing machine – converts electrical energy to mechanical energy
- Tape recorder – converts electrical energy to sound energy
- Television – transforms electrical energy to light and sound energy
- Wind turbine generating electricity – converts mechanical energy from the spindle of the wind turbine to electrical energy
- Solar cell – converts light energy to electrical energy
- Computer – transforms information entering the computer, such as letters, numbers, symbols, etc., to electrical signals and then transform the output from the electrical signal to a format that is understandable to humans, such as letters, numbers, pictures, animations and sounds through a display device, such as a monitor, printer, or speaker.
In order to claim the additional deduction under this Royal Decree, the company or legal partnership must comply with the rules, procedures, conditions, and timeline specified by the Director-General of the Revenue Department.
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