SMEs to get tax break on software-related expenses



The cabinet on Tuesday approved in principle a measure to allow small-and-medium-sized enterprises (SMEs) to use their software or computer programme-related expenses as a deductible on corporate income tax at the rate of two times the expense in some cases, said the Revenue Department’s director-general, Dr Ekniti Nitithanprapas.

The approval is aimed at encouraging SMEs to deploy digital technology to upgrade their operations, said Dr Ekniti.

This new tax measure will be applied to SMEs’ accounting periods for 2021 and 2022.

The three eligible expenses include the purchase of software or computer programmes from software firms, payment for hiring developers to make software or fees paid to software service providers for using their services. All these software firms, developers or software service providers must be registered with the Digital Economy Promotion Agency (DEPA).

Usually, SMEs can record their annual asset depreciation as an expense for three years. If their cost is 150,000 baht, they can book depreciation as an expense at 50,000 baht per year.

The new tax measure approved on Tuesday means that besides depreciation, firms can also use the cost of a new computer for a tax deduction not exceeding 100,000 baht. So, if a new computer costs 150,000 baht, they can book expense at a maximum of 100,000 baht.

When hiring software developers or using software services, SMEs can book the cost at the rate of two times the cost not exceeding 100,000 baht. For example, if a firm pays 150,000 baht to software developers, they can book this cost as an expense of 250,000 baht for a tax deduction.