Thai Science Min offers 300 percent tax deduction to encourage innovation research

[webfact]

Science Min offers 300 percent tax deduction to encourage innovation research and development

BANGKOK, 25 March 2016 (NNT) – The Ministry of Science and Technology has kicked off CEO Innovation Forum 2016 by announcing a 300 percent tax deduction for companies that support research, development and innovation.

Minister of Science and Technology Pichet Durongkaveroj chaired the opening of CEO Innovation Forum 2016, making known that the government will offer 300 percent tax deductions for private companies that invest in research, development and innovation.

The minister gave a speech under the topic “Enhancing the Nation’s Competitive Edge through Research, Development and Innovation”, stating that his ministry has created mechanisms to support the private sector in conducting research and development as they are major factors for competitiveness.

On top of the 300 percent tax deduction, the ministry is also offering to limit revenue tax for small and medium enterprises to only 10 percent for 2 payments, to exempt entity taxes for New Growth Engine businesses and to pass out Innovation Coupons, which companies may use as funds when investing in innovation.

For the 300 percent deduction, the incentive is available to businesses with revenue under 50 million baht while those exceeding the figure can access lesser deductions. The program will be available for 5 years while the government studies its feasibility, if proven to be effective it may be extended.

-- NNT 2016-03-25

[Lannig]

How can someone have 300% tax reduction? what the hell does this mean? You're tax-free and on top of this they'll give you money, twice the amount of taxes you would normally have to pay? confused.

[jamesbrock]

How can someone have 300% tax reduction? what the hell does this mean? You're tax-free and on top of this they'll give you money, twice the amount of taxes you would normally have to pay? confused.

A 300% deduction means that for ever 1 baht a private company invests in research, development and innovation, 3 baht will be deducted from the company’s taxable income for the year. (Don't get a deduction confused with an offset.)

[Lannig]

Ah OK, makes a lot of sense. Thanks for enlightening me

[scorecard]

In reality very few companies, world wide, actually have regular innovations.

There are many reasons but a classic example:

- CEO / department managers etc., regularly give a 'motivation' speech including 'come on people your all clever let's be innovative.' Nothing more said by the CEO to the workforce or to managers.

- Now check the organization chart and you will often (99% of the time) discover there is not one position which is totally focused or responsible for creating regular or any innovation.

- No managerial position is responsible for regular innovation.

- Nobody in the company has ever discussed / defined why the company wants innovation. E.g.

- Create a new revenue stream,

- Improve an existing product so that it will be more attractive to customers / the price can be increased,

- Create a strong competitive advantage etc.,

Or in the opposite direction (still very valid)

- Create real cost savings in terms of manufacturing, supply chain, administrative costs or efficiencies etc.

- Strongly improve speed of delivery, etc.

- Often nobody in the company even really understands specifically how to measure innovation. This is obviously case by case but a quick overriding macro policy for most business corporations should be that it's not an innovation until it's implemented and it's generating income or actual cost savings.

Edited March 25, 2016 by scorecard

[phoenixdoglover]

Because as we all know, the greatest inventions throughout history were made possible by tax incentives.

[gandalf12]

Where are the people who will provide these innovations? Tax reductions are fine if you have a team of researchers who are hindered due to lack of funding but Thailand is not one of those places.

[clockman]

They speak to justify there position,remember Plod the last science minister and wild animal food seller in Chiang Mai.!