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Thailand: Firms urged to hurry up for peak deductions
The Revenue Department is urging the private sector to accelerate investment to benefit from the highest tax deduction of 2.5 times.
The measure, due to expire this year-end, allows the private sector to benefit from tax savings by more than usual, as private enterprises can deduct 2.5 times expenses from investment in machinery from corporate income tax, said spokesperson Sommai Siriudonset.
The Revenue Department will allow the deduction period to last at least five years, meaning expenses from investment will be tax-deductible for a period of five years or longer, Mrs Sommai said.
The cabinet approved the tax deduction measure to stimulate private investment earlier this year.
The private investment index contracted by 13.5% year-on-year in the second quarter, widening from a 6.5% contraction in the first quarter, according to Bank of Thailand data.
Despite the diminished contraction in June compared with May, private investment indicators still contracted substantially on weak domestic and external demand, high excess production capacity and fragile business sentiment, the central bank said.
The essence of the measure to deduct corporate income tax stipulates that companies or juristic entities can deduct expenses from machinery investment by 2.5 times, which is divided into two parts.
The first part covers a deduction of 1.5 times of actual expenses and is considered a corporate income tax exemption.
The second part covers a deduction of amortisation. To receive this tax privilege, operators have to comply with stipulated conditions such as the purchased machinery has never been used before and such machinery should be used by Dec 31, 2020.
The Revenue Department expects the tax deduction measure to stimulate additional investment from the private sector to the tune of 110 billion baht.
Source: https://www.bangkokpost.com/business/1967355/firms-urged-to-hurry-up-for-peak-deductions