Can Thai factories claim a 150% tax deduction on new air compressors? Yes. Under Royal Decree No. 805, companies and juristic partnerships in Thailand can deduct 150% of the cost of high-efficiency machinery, including PMV screw air compressors, purchased between March 3, 2026, and December 31, 2028, provided the equipment holds a Level 5-star energy efficiency label from DEDE/EGAT.
Summary of Benefits and Requirements
- The Incentive: 100% standard depreciation + 50% additional bonus deduction.
- Duration: Valid for assets acquired and ready for use by December 31, 2028.
- Core Requirement: Must have the DEDE/EGAT 5-star energy efficiency label.
- Documentation: Requires a full e-Tax Invoice from a VAT-registered supplier.
- Exclusions: Cannot be combined with BOI or EEC tax holidays.
What is Royal Decree No. 805 and how does it save you money?
Royal Decree No. 805 is a Thai government initiative designed to accelerate the adoption of energy-efficient industrial technology. It allows businesses to write off 1.5 times the actual expenditure of qualifying equipment against their taxable income.
In practical terms, if your facility invests 1,000,000 THB in a high-performance industrial air compressor, you don’t just deduct that million. You deduct 1,500,000 THB over the asset’s useful life. At a standard 20% corporate income tax rate, this results in a direct tax saving of 300,000 THB, effectively a 30% discount on the machine, funded by the Revenue Department.
Who is eligible for the 150% tax deduction?
Any company, juristic partnership, or individual earning income under Sections 40(5) through 40(8) of the Revenue Code (which covers most manufacturing and service sectors) is eligible.
To qualify, you must:
- Be a VAT-registered operator.
- Purchase “brand new” equipment (second-hand or refurbished units do not qualify).
- Ensure the equipment is used within Thailand.
- Acquire and have the machine ready for use before the December 2028 deadline.
Note for SMEs: This is a “use it or lose it” benefit. With Thailand’s energy costs rising, upgrading to PMV screw air compressors now serves a dual purpose: slashing your monthly electricity bill and reducing your annual tax liability.
Why is the DEDE 5-star energy label the most important factor?
The Department of Alternative Energy Development and Energy Conservation (DEDE), in collaboration with EGAT, issues energy labels. Only machines certified with the 5-star label (the highest efficiency tier) qualify for the 150% deduction.
At AirSpace Machinery, we focus exclusively on Permanent Magnet Variable Frequency (PMV) technology. Unlike fixed-speed compressors that run at 100% capacity even when demand is low, PMV systems adjust motor speed to match actual air demand. This technical precision is often what allows a machine to cross the threshold into the 5-star efficiency bracket.
Step-by-Step: How to claim your tax deduction
Claiming the deduction is a matter of administrative accuracy. Follow these four steps to ensure the Revenue Department accepts your filing:
- Verify the Label: Before purchasing, request the DEDE 5-star certification document from the supplier. If the machine only has a 3-star or 4-star label, you cannot claim the 50% bonus.
- Request an e-Tax Invoice: Royal Decree 805 specifically prioritizes digital transparency. You must obtain a full e-Tax Invoice and e-Receipt from the seller.
- Ensure Operational Readiness: The compressor must be installed, commissioned, and ready for work by December 31, 2028. Buying a machine and leaving it in a crate will disqualify the claim for that tax year.
- Accounting Entry: Your accountant should record the 100% depreciation as per standard accounting principles and then apply the additional 50% “bonus” deduction in the annual tax return (P.N.D. 50).
Comparison: Standard vs. 150% Tax Deduction (Example: 1M THB Investment)
| Feature | Standard Deduction | Royal Decree 805 (5-Star Label) |
|---|---|---|
| Purchase Price | 1,000,000 THB | 1,000,000 THB |
| Total Deductible Amount | 1,000,000 THB | 1,500,000 THB |
| Tax Savings (at 20% CIT) | 200,000 THB | 300,000 THB |
| Net Cost of Machine | 800,000 THB | 700,000 THB |
| Energy Savings | Standard | Up to 40% higher with PMV |
Engineering for Thailand: Humidity and Grid Stability
When selecting an energy-efficient air compressor for the Thai market, efficiency labels are only half the story. South East Asia’s high humidity and ambient temperatures (often exceeding 40°C in factory settings) can degrade the performance of inferior machines.
- Humidity & Dew Point: High moisture content requires robust oil-free or high-purity systems to prevent pipe corrosion and pneumatic tool failure. AirSpace Machinery’s engineering team ensures that every PMV unit is optimized for these tropical conditions.
- Grid Quality: Industrial estates in some regions may experience voltage fluctuations. Our PMV controllers are designed to handle these variances, protecting the permanent magnet motor and maintaining consistent air pressure.
Why AirSpace Machinery is your partner for Royal Decree 805
We don’t just sell hardware; we provide 20 years of engineering excellence. With a 4000m² facility and over 100M yuan in annual sales, we understand the compliance needs of international buyers.
- ISO 9001 & CE Certified: We ensure all documentation is ready for your audit. Verifying ISO 9001 status is critical when claiming government incentives.
- PMV Specialists: We specialize in Permanent Magnet Variable Frequency Screw Air Compressors, the specific technology that most easily meets DEDE 5-star standards.
- Export Expertise: We handle the logistics and provide the necessary technical specs to satisfy Thai customs and tax authorities.
Frequently Asked Questions (FAQ)
Q: Can I claim the deduction if I already have BOI privileges?
A: Generally, no. Royal Decree 805 states that you cannot claim this deduction if you are already receiving tax benefits under other schemes like the BOI or EEC for the same asset.
Q: Does the deduction apply to maintenance or spare parts?
A: No. The 150% deduction applies specifically to the capital expenditure (CAPEX) of the machinery itself. However, the energy savings from a new PMV unit often pay for its own maintenance. See our guide on fixing common compression mistakes.
Q: How do I know if a compressor is actually “5-star”?
A: Look for the physical sticker on the machine and ask the supplier for the DEDE registration number. You can also verify the model on the official DEDE website.
Q: Why choose screw compressors over other types?
A: For industrial applications, screw-type compressors provide the continuous flow and efficiency required for Level 5 certification. We do not manufacture piston compressors because they cannot meet the rigorous energy-saving requirements of modern industrial mandates.
Get a Proposal for a 5-Star Compliant System
Don’t leave 50% of your tax deduction on the table. Our team can help you select a PMV screw compressor that meets Thai regulatory standards while slashing your energy costs.
Mandatory Fields for Proposal:
- Required Pressure: (Specify in bar or psi)
- Required Flow Rate: (Specify in m³/min or CFM)
- Current Lead Time: Neutral (Depends on specific configuration and shipping schedule).
Sources & Technical Standards
- Royal Decree No. 805: Published March 2, 2026, by the Thai Revenue Department.
- ISO 8573-1:2010: International standard for compressed air purity classes (referenced for air quality).
- ISO 9001:2015: Quality management systems (AirSpace Machinery certification).
- DEDE / EGAT: Energy Efficiency Labeling requirements for Thailand.
Author Box
Penny Winston
Technical Writer, AirSpace Machinery Co., Ltd.
Penny specializes in industrial policy and energy-efficient manufacturing solutions for the South East Asian market. With a background in mechanical engineering communications, she helps factories navigate the intersection of technology and tax compliance.
Reviewed by Engineering
