Tax deduction on e-tax system investments

Keywords: Mazars, Thailand, Tax, Tax Deduction, Electronic Tax System, Revenue Department, Royal Decree, e-Tax Invoices, e-Receipts, VAT, ICT, ETDA

11 July 2019

Investment in electronic tax system

Corporate income taxpayers are allowed to claim a 100% additional deduction on expenses paid during 30 April 2019 – 31 December 2019 for investment in:

• Electronic document system, computer programs, equipment for digital certificate storage, computer or computer accessories to be used in preparing, transferring or maintaining electronic tax invoices (“e-tax invoices”) or electronic receipts (“e-receipts”).
• Electronic tax payment system, computer programs, equipment for digital certificate storage, computer or computer accessories to be used in remitting withholding tax, income tax or value added tax.

The above assets shall:

1. not have been used previously;

2. be assets which qualify for deduction of depreciation under Section 65 bis (2) of the Revenue Code and are acquired and ready for use by 31 December 2020;

3. be assets that will be used in Thailand;

4. be assets which will be used for a period of not less than 3 consecutive accounting periods;

5. not be assets which receive tax benefits under other Royal Decrees, whether wholly or partly; and

6. not be assets which are used in businesses that are exempt from corporate income tax under the law on investment promotion, whether wholly or partly.

Rules, procedures and conditions as prescribed by the Director-General of the Revenue Department must be complied with in order to claim this additional deduction.

The additional deduction will not apply to expenses paid by e-tax invoice and e-receipt service providers and computer program developers for sales or services to other persons.

Service fee paid to service providers

Corporate income taxpayers are allowed to claim a 100% additional deduction on fees paid during 30 April 2019 – 31 December 2019 for cloud storage services, electronic certificate services and service fees paid to e-tax invoice and e-receipt service providers to prepare, transfer and maintain e-tax invoices or e-receipts. Rules, procedures and conditions as prescribed by the Director-General of the Revenue Department must be complied with.

This will not apply to the expenditure of electronic data transfer service providers and computer program developers for sales or services to other persons.

Investment in cash register

Corporate income taxpayers, which are VAT registrants, are allowed to claim a 100% additional deduction on expenses paid from 30 April 2019 to 31 December 2019 for investment in the cash register.

The cash register shall:

1. connect to a computer system as a point of sale system;

2. issue a summary of tax invoices with complete particulars as required under Section 86/6 of the Revenue Code;

3. not have been used previously;

4. be an asset which qualifies for the deduction of depreciation under Section 65 bis (2) of the Revenue Code and must be acquired and ready for use within 31 December 2020;

5. be in Thailand;

6. record sales details and amount of sales or service fees;

7. separate VAT amounts from product prices or service fees;

8. connect to an electronic payment system;

9. receive and send VAT information for each item of goods or services;

10. be used for a period of not less than three consecutive accounting periods;

11. not be an asset that has received tax benefits under other Royal Decrees, whether wholly or partly; and

12. not be an asset that is used in businesses that are exempt from corporate income tax under the law on investment promotion, whether wholly or partly.

Rules, procedures and conditions as prescribed by the Director-General of the Revenue Department must be complied with.

If corporate income taxpayers have claimed the additional deduction under this Royal Decree and later do not comply with the specified conditions in any accounting period, the right to claim additional deduction under this Royal Decree will be terminated. The corporate income taxpayer will have to include the amount claimed for additional deduction as its income for the computation of net taxable profit in the accounting period that the additional deduction is claimed, except the case where the asset is destroyed, lost or terminated.

Expenses which qualify for this additional deduction must be expenses paid by corporate income taxpayers for the purpose of preparing, transferring and maintaining e-tax invoices and e-receipts for their own business activities. For small corporate income taxpayers such as SMEs, who have limited resources in developing e-tax invoices and e-receipt systems, they may use services of e-tax invoice and e-receipt service providers to transfer e-tax invoices and e-receipts to the Revenue Department. Such service providers are required to have the approved system, which is in accordance with recommendations on ICT standards for electronic transactions. The certificate for approved service providers will be issued by the Electronic Transactions Development Agency (“ETDA”) and such certificate will be submitted to the Revenue Department for consideration.