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Thailand: Additional 150% deduction for investments in new machinery, hotel renovations (COVID-19)

Thailand: Additional 150% deduction for investments

Royal Decrees No. 695 and No. 698 provide an additional 150% deduction to companies and juristic partnerships for certain investments made in new machinery and hotel renovations—a relief measure that aims to provide economic support for sectors affected by the coronavirus (COVID-19) pandemic.

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Companies and eligible partnerships can claim the additional 150% deduction for income tax purposes for: (1) qualifying amounts paid for investment in machinery (but excluding machinery repair and maintenance); and (2) qualifying payments made for additions, alterations, extensions or improvement of property related to hotel business.

Qualifying payments must be made in 2020 (that is, during the period from 1 January 2020 through 31 December 2020).

Additional deduction for investments in new machinery

Companies and juristic partnerships can claim an additional 150% deduction for qualifying payments for investment in machinery made in 2020—but this excludes machinery repair and maintenance. Purchases made for machinery held for lease are not eligible for the additional 150% deduction for taxpayers engaged in a leasing business.

Eligible machinery is defined as an assembly of parts, including equipment, for use in generating energy, changing or transforming energy, using either water, steam, fuel, wind, gas, electric or any power or the combination of several power types. However, it does not cover vehicles registered under the law governing such vehicles.

Additional deduction for investments in hotel renovation

Companies and juristic partnerships conducting an eligible hotel business can claim an additional 150% deduction for qualifying payments made in 2020. For these purposes, qualifying payments include those made for additions, alterations, extensions or improvement of property related to the hotel business. However, this tax benefit will not apply to amounts paid for property repair and maintenance.

Qualifying properties must be:

  • A permanent building used for the hotel business operation (as defined under the Hotel Act)
  • Fixtures or furniture that are permanently fitted to the abovementioned building

Procedures and requirements

In order to claim these tax benefits, taxpayers must prepare and submit an investment project and payment plan to the Revenue Department. In addition, the following requirements for machinery and qualified properties must also be met:

  • The machinery must have never been used.
  • The machinery and qualified properties must be acquired and ready to use by 31 December 2020.
  • The machinery and qualified properties must be subject to wear and tear and depreciation that is deductible under Section 65 Bis (2) of the Revenue Code.
  • The machinery and qualified properties must be located in Thailand.
  • The machinery and qualified properties must not have been granted tax privileges under any other Royal Decree.
  • The machinery and qualified properties must not be used in a business that has been granted a corporate income tax exemption under the law governing investment promotion, the law enhancing competitiveness for targeted industries, or the law governing eastern special development zone.

The tax benefits provided by Royal Decree No. 695 and No. 698 will be revoked if the taxpayer fails to comply with the specified procedures and requirements. In case that the machinery or the qualified property is sold, damaged or lost, the tax benefit will cease in the accounting period that such event occurs. Further guidelines on the application of these tax benefits are expected from the Director-General of the Revenue Department.


Read an August 2020 report prepared by the KPMG member firm in Thailand

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