31 Jan 2020
THAILAND: Economic Slowdown Triggers Launch of Three Investor Incentive Schemes
In a bid to counter the country’s economic slowdown, three incentive schemes for investors have been unveiled. Chief among these is a move that sees businesses – including FDI-backed projects – entitled to claim corporate income tax (CIT) deductions of up to 2.5 times the actual amount spent on machinery purchased – rather than leased – in the period 1 January-31 December 2020.
Under the terms of the second scheme, new machinery imported into the country for use in investment projects will be exempt from the payment of all relevant taxes until 31 December this year. In a final move, the state-owned Export-Import Bank of Thailand is to offer soft loans to export-oriented businesses looking to upgrade their technical infrastructure. With a total of Baht 5 billion (US$160 billion) on offer, the loans come with a preferential rate of 2% for the first two years, 4% for years three to five and a rate of 6% for years six and seven.
The introduction of the incentives follows a decline in the country’s export levels as an indirect consequence of the ongoing US-China trade dispute. Although the move is expected to result in a Baht 8.6 billion loss in tax revenue, the government expects the measures to attract investment of some Baht 110 billion, representing a 0.25% contribution to the country’s GDP growth.