Tax Incentives Monitored by the DEDE
Policy measure

The Thai government introduced tax incentives via the Board of Investment (BOI) to encourage energy efficiency improvement. Corporate tax deductions are monitored by the Department of Alternative Energy Development and Efficiency (DEDE).

Implementation

To induce operators’ decision-making to invest in the purchase of energy efficient equipment/machinery, corporate tax deductions are made available via three methods (APERC, 2011):

  • “Cost-based: allow 1.25 times the actual investment capital for tax deduction calculation, which will lessen the tax burden, by phasing the amount of eligible tax deduction over a period of five years. So far 94 facilities have received the tax benefits. The government lost US$4.1 million of tax revenues but saved energy expenses around US$ 11 million.

  • Performance-based: 30% of the savings value from energy saving projects would become a tax deduction through income tax for the project owners, but not exceeding THB 2 million. After two years of implementation, 174 facilities have joined the program by investing over US$38.9 million in EE projects, reducing energy consumption of US$25.1 million.

  • BOI (Thailand Board of Investment): A privilege from the Board of Investment for investors who invest in EE and RE business by receiving the waiver of income and import tax for a maximum of eight years. As of October 2009, there are 37 projects receiving BOI privilege for the total investment of US$235 million with the potential energy savings of US$72.3 million.” 

Challenges
No identified challenges.
Outcomes

According to APERC (2011), Phase 1 (2006–07) of the project led to the introduction of 193 approved projects and resulted in a total investment of THB 4.836 million in energy efficiency improvement. As of 2008, 127 participating projects were part of Phase 2 (2008–09).


Sinsukprasert (2009) has identified the following outcomes over the period 2002-2008:

  • Cost-based: In 2008, 94 projects were supported, which in total leveraged EE investments of USD 17 million and were therefore granted tax reductions of USD 3.2 million. These projects created energy savings of US$10 per year.    

  • Performance-based: In 2008, 200 projects were supported, which in total leveraged EE investments of USD52 million and were therefore granted tax reduction of USD 3 million (in a form of subsidy). These projects created energy savings of USD 30 million per year.    

  • BOI-based: In 2008, 27 projects were supported, which in total leveraged EE investments of US120 million. These projects created energy savings of USD 35 million per year.

References

APERC (Asia Pacific Energy Research Centre), 2011. Compendium of Energy Efficiency Policies of APEC Economies - Thailand. Tokyo. Available at: www.ieej.or.jp/aperc/CEEP/Thailand.pdf.


Sinsukprasert, P., 2009. Thailand Clean Energy Policy and Programs.  ADB Workshop on Climate Change and Energy March 27th 2009 Intercontinental Hotel, Bangkok. Available at: www.adb.org/documents/events/2009/Climate-Change-Energy-Workshop/THA.pdf.