Thailand To Broaden R&D Tax Deductions Rules

September 18, 2012 Taxation in Thailand

research and developmentBANGKOK – Research and development activities are a vital key to the continued expansion of the economy of Thailand, and the national government is committed to maintaining the tax privileges available to businesses involved in the development of new technologies and products.

On September 18th the media in Thailand reported that the Minister of Finance of Thailand Kittiratt Na-Ranong announced that the Finance Ministry will soon seek approval from the Cabinet to ease the rules regarding tax deductions for research and development activities and to increase the rate of the deductions granted to businesses.

Under current rules, Thai businesses conducting in-house research and development activities are eligible to deduct double the amount of their associated expenses from the calculation of their income taxes.

The Finance Minister said that following the upcoming reduction of the corporate income tax rate from 30 percent to 20 percent, which is scheduled to take effect in 2013, the effective tax savings from the R&D deductions will be reduced.

In order to maintain the same level of tax savings from the R&D deductions, the Ministry is proposing that businesses should be allowed to triple the cost of the expenses for their research and development activities when calculating their tax deductions.

The Ministry has also proposed that enterprises should be able to deduct the expenses for R&D activities conducted by external researchers, hired firms or joint development projects with other businesses.

Photo by RDECOM