Thailand’s Cabinet approves tax breaks for investment in solar power equipment

Thailand’s Cabinet has approved granting corporate and personal income tax deductions for businesses for 50% of the costs of investment in high-efficiency machinery, equipment, or materials for energy conservation. A personal income tax deduction of up to Baht 200,000 has also been approved for the cost of equipment and installation of solar rooftop power generation systems for residential homes.

A Royal Decree will be issued under the Revenue Code to give effect to the proposed deductions. The measures will be effective from the day following the announcement of the Royal Decree in the Royal Gazette and will end on 31 December 2028.

Tax deduction for businesses

The high-efficiency machinery, equipment, or energy conservation materials that contribute to energy savings must be certified with a 5-star energy efficiency label from the Department of Alternative Energy Development and Energy Conservation. Only individuals with taxable income under Sections 40 (5), (6), (7), and (8) of the Revenue Code, such as entrepreneurs in the industrial, commercial and service sectors, are eligible for the personal income tax deduction.

The high-efficiency machinery, equipment, or energy conservation materials must be purchased from VAT-registered businesses and supported by full tax invoices in electronic format (e-Tax Invoice).

Other important conditions include:

- The equipment must be located in Thailand and never used before.

- Depreciation or amortization of equipment must be deducted in accordance with Section 65 bis (2) of the Revenue Code and must be acquired and ready for use by December 31, 2028.

- The equipment must not receive tax benefits under any other Royal Decree or Ministerial Regulation issued under the Revenue Code, whether in whole or in part.

-  The equipment must not be used for any business that has been exempted from income tax under the Investment Promotion Act, the Act on Enhancing the Competitiveness of the Country for Target Industries, or the Eastern Special Development Zone Act, whether in whole or in part.

Personal income tax deduction for purchase of solar rooftops

A personal income tax deduction will be granted for the purchase of equipment and installation of solar power generation systems installed on rooftops, decks, or any part of residential buildings connected to the MEA or PEA power grid, up to the actual amount paid, but not exceeding Baht 200,000.

A deduction will be allowed for one solar rooftop power generation system only in the tax year in which the connection to the power grid is completed.

The solar rooftop systems and installation costs must be paid to VAT-registered businesses and supported by full tax invoices in electronic format (e-Tax Invoice).