Thailand Depreciation Tax Rates
Update | August 2016
On 5 August 2016, Royal Decree (No 620) was gazetted, amending the depreciation tax rate allowances for motor vehicle prototypes used for research and development and/or performance testing purposes. This Tax Law Guide has been updated for this amendment.
The Thai tax law prescriptions for depreciation allowances, and the rules for the deduction of depreciation allowances for tax purposes in Thailand are as follows:
Depreciation Tax Rates for Business Assets
Unless businesses are entitled to claim accelerated depreciation allowances, the maximum rates of depreciation for tax purposes in Thailand are as follows:
Accelerated Depreciation Tax Rates for Certain Types of Business Assets
For certain types of business assets, the Thailand tax law prescribes for accelerated rates of depreciation allowances that doesn't increase the total amount of the tax deduction over the life of the asset but accelerates the depreciation allowance in the year of purchase and reduces the depreciation allowance for the remaining years. The accelerated rates are:
Rules for Claiming Depreciation Allowances for Tax Purposes
Depreciation Rates Adopted for Accounting Purposes
Tax deductions for depreciation allowances cannot exceed the amount of depreciation that is adopted for accounting purposes and accounting depreciation rates cannot be uplifted to the maximum rates under the tax law.
That is, if a rate of depreciation allowance adopted for accounting purposes is lower than the maximum rate prescribed in the tax law, the depreciation allowance for tax purposes is permitted only at the (lower) rate adopted for accounting purposes.
Depreciation Rate Changes
Once a rate and method of depreciation for a category of assets is adopted, that rate and method cannot be changed unless the prior written approval of the Revenue Department is firstly obtained.
For general businesses, depreciation allowances for passenger cars and mini vans with no more than 10 seats are allowed at not more than 20% pa, but only on the portion of the cost price up to Baht 1 million. No depreciation allowance is allowed on the portion in excess of Baht 1 million.
For passenger cars and mini vans with no more than 10 seats that are used for renting out by car rental businesses, depreciation allowances are allowed at not more than 20% pa on the entire cost price.
For motor vehicle prototypes that are used for research and development or performance testing purposes, and which vehicles are exempt from excise tax under the excise tax law, depreciation allowances are allowed at not more than 20% pa on the entire cost price.*
* As amended by Royal Decree (No 620) gazetted on 5 August 2016, and applying from and including 1 January 2016.
Assets Acquired under Hire Purchase or Installment Sales Contracts
For assets acquired under hire purchase or installment sales contracts, depreciation shall be calculated (at no more than the prescribed maximum rate for the particular asset) on the total amount payable under the hire purchase or installment sales contract (i.e. the total of all the principal and interest payments under the hire purchase or installment sales contract).
Additionally, the amount of the tax deduction for depreciation in any year shall not exceed the amount of principal and interest payable under the hire purchase or installment sales contract for that year.
This is a general information Tax Insight Article only. It should not be used to determine any particular matter without consulting with an experienced Thailand tax advisor.