Writing-off Thailand Plant and Equipment Assets
Tax Insight | March 2012
The Thailand Revenue Code’s general provision dealing with expenses is the provision that is applicable for write-offs of plant and equipment assets. That provision is Section 65 ter (13), which prescribes as follows:
“Expenses not exclusively expended for the purpose of acquiring profit or for the purpose of business shall not be allowed as expenses for tax purposes.”
And specifically for write-offs of plant and equipment assets under Section 65 ter (13), the Director-General of Revenue's Instruction No Paw 58/2538 prescribes as follows:
1. For an asset defective beyond repair, an expense is allowed for the residual cost value of the asset when the asset is destroyed or sold.
2. For an asset that is lost, an expense is allowed for the residual cost value of the asset, as follows:
(a) If the asset is covered by an insurance policy, its residual cost value is allowed as an expense against the insurance proceeds;
(b) If the asset is not covered by insurance and the loss is incurred during the course of business, its residual cost value is allowed as an expense provided that documentary evidence proving the loss is maintained.”
The Revenue Department's lawyers have restated the rules in Instruction No Paw 58/2538 many times and unless a company has lost the asset (and keeps documentary evidence to absolutely prove that the asset was lost) then the only options are to destroy the asset or to sell the asset.
Destroying an asset?
Tax Ruling No Gor Khor 0811/09658 dated 14 September 2542 determined for a company destroying its assets, as follows:
Selling an asset?
Tax Ruling No Gor Khor 0706/5694 dated 8 June 2007 summarizes the Revenue lawyers' determinations for sales of assets, as follows:
A loss that is incurred from a popular tax planning scheme in Thailand of selling an asset to another company in the same group would generally be considered as not resulting from a normal or usual loss in the course of carrying on business, and therefore, not allowed as an expense under Section 65 ter (13) of the Revenue Code.
This is a general information Tax Insight Article only. It should not be used to determine any matter without consulting with an experienced Thailand tax advisor.