Tax Deductions: R&D Expenses (200% Deduction) | Siam Advice Firm

Like training expenses, R&D activities qualify for a 200% tax deduction in Thailand—making innovation financially attractive.

What Qualifies as R&D

Product Development

New product design and prototyping
Software development (new features)
Formula development (food, cosmetics, chemicals)
Engineering design improvements

Process Innovation

Manufacturing process improvements
Quality control systems
Automation and efficiency projects
Environmental compliance solutions

Technology Research

AI and machine learning development
Blockchain applications
IoT solutions
Cybersecurity systems

What Doesn't Qualify

❌ Routine product updates or maintenance ❌ Market research and surveys ❌ Quality control testing (unless developing new methods) ❌ Administrative or management activities ❌ Cosmetic changes without technical innovation

Eligible R&D Costs

Personnel Costs

Salaries of R&D staff
Benefits for R&D team members
Contractor fees for R&D work

Materials and Supplies

Raw materials for prototypes
Testing materials
Laboratory supplies

Equipment

R&D equipment (can also depreciate separately)
Software licenses for development
Testing apparatus

External R&D

Payments to universities for research
Collaboration with research institutes
Outsourced R&D services

Documentation Requirements

1. R&D Plan

Project objectives
Technical challenges being addressed
Expected outcomes
Timeline and milestones

2. Progress Reports

Monthly or quarterly updates
Technical documentation
Test results
Prototype records

3. Cost Allocation

Time sheets for R&D personnel
Material usage logs
Equipment allocation records
Clear separation from non-R&D costs

4. Results Documentation

Final reports
Patents or IP applications (if applicable)
Product launch documentation
Technical specifications

Real Example: Software Company

Project: Developing AI-powered customer service chatbot

R&D Costs (Annual):

2 developers (50% time): 600,000 THB
Cloud computing (testing): 120,000 THB
AI training data licenses: 80,000 THB
Total R&D: 800,000 THB

Tax Benefit:

Deduction: 1,600,000 THB (200%)
Tax savings: 320,000 THB (20% of 1,600,000)
Net cost: 480,000 THB

Effective discount: 40% off R&D costs

Strategic Planning

Separate R&D from Operations

Create clear boundaries:

R&D phase: 200% deduction
Production phase: 100% deduction

Example:

Developing new feature: R&D (200%)
Maintaining existing feature: Operations (100%)

Document Everything

The more documentation, the stronger your claim:

Git commits with technical notes
Design documents
Test results
Meeting notes discussing technical challenges

Combine with BOI

BOI companies can claim R&D deductions even during tax exemption:

Build tax shields for post-exemption period
Carry forward unused deductions
Maximize long-term tax efficiency

Common Mistakes

Mistake 1: Claiming Routine Work

Problem: Calling regular software updates "R&D"

Solution: R&D must involve technical uncertainty or innovation

Mistake 2: Poor Time Tracking

Problem: Can't prove how much time staff spent on R&D vs. regular work

Solution: Implement time tracking systems

Mistake 3: Missing Technical Documentation

Problem: No proof that work was actually R&D

Solution: Maintain technical documentation throughout project

Approval Process

Unlike training deductions, R&D deductions may require:

Pre-approval from Revenue Department (recommended)
Technical review of R&D claims
Audit defense with technical documentation

Best practice: Get pre-approval for large R&D projects.

BOI Additional Benefits

BOI-promoted companies doing R&D get triple benefits:

200% deduction on R&D costs
0% CIT during promotion period
Additional grants from government R&D funds

Related Service: Accounting & Tax Compliance — R&D tax planning and documentation support.