On 5 August 2016 Royal Decree (No 620) was gazetted prescribing the maximum rate of depreciation for motor vehicle prototypes that are used for the purposes of research, development or performance testing.
This Insight updates the tax depreciation rates allowable under RD (No 620).
Depreciation Rates
Unless a business is entitled to a concessional depreciation rate under a specific tax law, the rates of depreciation cannot exceed the following maximum rates:
Buildings
Permanent buildings
5% pa
Temporary buildings
100% up front
Natural resources
Depleteable natural resources
5% pa
Leases
When the period of the lease is unlimited
10% pa
When the period of the lease is limited
100 / period of the lease % pa
Rights to use processes, formulas, goodwill, trademarks, licenses, patents, copyrights and other rights
When the period of the right is unlimited
10% pa
When the period of the right is limited
100 / period of the right % pa
Plant and equipment assets
Computer hardware and software
33.33% pa
Research and development assets
40% up front and remainder at not more than 20% pa
Other plant and equipment assets
20% pa
Motor vehicles
Passenger cars and vans with not more than 10 seats
20% pa on the cost price up to 1 million Baht (i.e. no depreciation allowed on the cost >1m Baht)
Passenger cars and vans used for the purpose of renting out by car rental businesses
20% pa
Motor vehicle prototypes for research, development or performance testing purposes
20% pa*
Other motor vehicles
20% pa
* As prescribed in Royal Decree (No 620) gazetted on 5 August 2016.
Accelerated Rates of Depreciation
Businesses having fixed assets excluding land of not more than 200 million Baht and not more than 200 employees are entitled to the following accelerated rates of depreciation allowances:
Permanent buildings
25% up front and remainder at not more than 5% pa
Computer hardware and software
40% up front and remainder at not more than 33.33% pa
Other plant and equipment assets
40% up front and remainder at not more than 20% pa
Tax Rules for Claiming Depreciation Allowances
Sherrings would also like corporate entities to note the following Thai tax rules:
Depreciation rates adopted for accounting purposes
Tax allowances for depreciation cannot exceed the amount of depreciation that is adopted for accounting purposes and accounting depreciation rates cannot be up lifted to the maximum rates under the tax law.
That is, if a depreciation rate adopted for accounting purposes is lower than the maximum rate under 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 written approval of the Revenue Department is firstly obtained.
Assets acquired under hire purchase or installment sales contracts
For assets, that are acquired under hire purchase or installment sales contracts, depreciation shall be computed at no more than the specified maximum rate for the particular asset on the total amount payable under the contract (i.e. the total amount of all of the principal and interest payments under the hire purchase or installment sales contract).
Additionally, the amount of the tax allowance for depreciation in a year shall not exceed the amount of principal and interest payable under the hire purchase or installment sales contract for that year.
Our Tax Insights and Updates are general information publications focusing on the laws for meeting tax compliance obligations, and tax rights and entitlements under the laws.