February 2022 Tax Updates

      1. Tax measures encouraging employee development in science, technology, engineering and mathematics (STEM) education

Royal Decree (No. 740) B.E. 2554 (2021) was enacted in order to grant an exemption of income tax for companies or juristic partnerships on income in the amount of 150% of the expenditure paid as expenses for sending employees of the company or juristic partnership to receive education or training, or for providing organisation training for employees of the company or juristic partnership in courses accredited by government agencies and announced by the Director-General. The expenditure must be paid from 1 January 2021 to 31 December 2022 in accordance with the rules, procedures and conditions announced by the Director-General. The taxpayer using this income tax exemption right must not use such expenditure in a business that is exempt from corporate income tax under the law on investment promotion; the law on enhancing the country's competitiveness for the targeted industries; or the law on the Eastern Special Development Zone, whether in whole or in part.

      2. Tax measures encouraging an employment of highly skilled STEM personnel

Royal Decree (No. 739) B.E. 2564 (2021) was enacted in order to grant an income tax exemption for companies or juristic partnerships operating in the targeted industries according to the law on enhancing the country's competitiveness of the targeted industries on income in the amount of 50% of the expenditure paid, in accordance with the employment contract, to highly skilled workers who possess skills related to science, technology, engineering, or mathematics. The exemption shall be granted on the actual amount paid - but only on the portion that does not exceed Baht 100,000 per month between 1 January 2021 to 31 December 2022 - in accordance with the rules, procedures and conditions announced by the Director-General. The qualifications of said workers must comply with the following conditions:

(1) Certified by an agency recognised by the Director-General as a highly skilled person in science, technology, engineering or mathematics and has been worked in the position that use the skill in the mentioned fields.

(2) Commence their work under an employment contract between 1 January 2021 to 31 December 2022.

(3) Not an employee of a company or juristic partnership who wishes to exercise the income tax exemption right within a period of one year prior to the date of commencement of work under the employment contract.

The employees who have all the requisite qualifications under Royal Decree (No. 711) B.E. 2563 (2020) shall also be deemed as qualified employees under this Royal Decree.

      3. Tax measures to promote investment in automation

companies or juristic partnerships equal to the expenditures paid between 1 January 2021 to 31 December 2022 on investment in machinery and computer software connected to machines in automation systems, but not for repair in order to maintain its present condition; in the amount of 100% of the actual amount paid, in accordance with the rules, procedures and conditions prescribed by the Director-General. The key details of said Royal Decree are as follows:

(1) Definition of "sales" and "automation"

“Machinery”means a component of several pieces for generating energy, changing or altering energy or transmitting energy by the force of water, steam, fuel, wind, gas, electricity or any other energy or energies combined, and includes flywheel equipment, pulleys, belts, axles, gears or other things that work reciprocally; however, it does not include vehicles that must be registered according to the law governing such vehicles.

"Automation" means a system that allows two or more machines to work together automatically when receiving commands from computer software, and there is a data connection between the machinery and the computer software.

(2) To be eligible for the tax incentive, the machinery and computer software for the machinery in the automation system are subject to the following conditions:

(2.1) Must be machinery and computer software under the automation investment project and certified by the agency recognised by the Director-General;

(2.2) Must have never been used before

(2.3) Must be eligible for depreciation and amortisation under Section 65 bis (2) of the Revenue Code, and shall be acquired and ready for use by 31 December 2020;

(2.4) Must be located in Thailand;

(2.5) Must not be machinery and the computer software that received tax benefit in accordance with any other Royal Decree issued under the Revenue Code, either in whole or in part; and

(2.6) Must not be machinery and computer software used in a business that received corporate income tax exemption under the law on investment promotion; the law on enhancing the country's competitiveness for the targeted industries; or the law on the Eastern Special Development Zone, whether in whole or in part.

(3) The companies or juristic partnerships are required to provide details of project investment and payment plans to the Director-General in accordance with the rules, procedures and conditions, and within the specified period prescribed by the Director-General.

(4) The companies or juristic partnerships that have exercised the right to exemption under this Royal Decree must not include the same exempted income as an income for a retroactive tax return, unless the machinery or computer program is sold or the machinery or computer program is destroyed, lost or invalidated. A breach of condition shall result in a termination of tax exemption right in the accounting period in which the machinery or computer program has been sold, destroyed, lost or deteriorated, and the companies or juristic partnerships are not required to calculate the exempted income for a retroactive tax return.

      4. Extension of period for tax measures to support personnel development for Industry 4.0

(1) Must not include the donated expenditures as donation expenditures under Section 65 ter (3) (b) of the Revenue Code;

(2) Must not use the exempted income under this Royal Decree to exercise any other income exemption right under the law on investment promotion; the law on enhancing the country's competitiveness for the targeted industries; or the law on the Eastern Special Development Zone, whether in whole or in part.