Additional tax deduction for SMEs to acquire a computer program

Under Royal Decree No. 725, small and medium enterprises (“SMEs”) are allowed to deduct a greater amount of expenses incurred for acquiring a computer program for corporate income tax purposes than normal. However, the rules, procedures, and conditions prescribed by the Director-General of the Revenue Department must be complied with.

Keywords: Mazars, Thailand, Tax, SMEs, Revenue department, Corporate income tax

9 February 2022

On 30 December 2021, Notification of the Director-General of the Revenue Department on Income Tax (No. 417) (“Notification No. 417”) was issued setting out those rules, procedures, and conditions, which are as follows:

Payment to a seller, developer, or service provider of a computer program registered with the Digital Economy Promotion Agency:

purchasing a computer program;
hiring another person to develop a computer program; or
using the computer program services of another person.

It does not include annual maintenance and expenses that are not directly related to the use of computer programs.

It is a computer program used in business administration and is created and developed in Thailand.
SMEs can claim a tax deduction of 2 times (1 time as a normal deduction and 1 time as an additional deduction) the amount actually paid for the expenses under no. 1 above. However, the amount claimed for the additional deduction is capped at THB 100,000 for each accounting period.
A computer program purchased or developed shall be depreciated according to Section 65 bis (2) of the Revenue Code and must be acquired and in a condition that is ready for use as intended by the end of the accounting period in which the payment for purchasing or developing is paid.
A computer program that SMEs purchase, develop, or use must not be the same type of computer program as one that is listed in the report as purchased, developed, or used in the prior accounting period. Instead, it must only be purchased, developed, or used in the accounting period beginning on or after 1 January 2021, but not later than 31 December 2022.

SMEs are required to prepare a report providing details of the computer program for which the additional deduction is claimed. The report must contain at least the information specified in the form attached to Notification No. 417, and SMEs must keep the report, including supporting documents for preparing the report, in its records at its place of business in the event of a tax investigation by the Revenue Department.

Notification No. 417 became effective from 1 January 2021 onwards.