On 5 August 2016, Royal Decree (No. 620) was gazetted, prescribing the rate of depreciation for motor vehicle prototypes used for research, development and performance testing.

This Insight has been updated for the prescription in Royal Decree (No. 620).

Depreciation Rates

Unless a business is entitled to an accelerated rate of depreciation, the rates of depreciation cannot exceed the following maximum rates:

Buildings

Permanent buildings		5% pa
Temporary buildings		100%

Natural resources

Depletable 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 or 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

Other assets susceptible to wear and tear and depreciation excluding land and inventories

Plant and equipment		20% pa
Passenger cars and vans having 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 purposes of renting out by car rental businesses		20% pa
Motor vehicle prototypes for research, development or performance testing purposes		20% pa*
Other assets		20% pa

* As Amended by Royal Decree (No 620), gazetted on 5 August 2016.

Accelerated Rates of Depreciation

For all businesses

Research and development assets		40% up front and remainder at not more than 20% pa
Computer hardware and software		33.33% pa*

* As Amended by Royal Decree (No 473), gazetted on 6 August 2008.

For small and medium enterprise businesses

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
Machinery and equipment assets	40% up front and remainder at not more than 20% pa
Computer hardware and software	40% up front and remainder at not more than 33.33% pa*

* As Amended by Royal Decree (No 473), gazetted on 6 August 2008.

Other Rules for Claiming Depreciation

Depreciation rates adopted for accounting purposes

If a depreciation rate that's adopted for accounting purposes is lower than the maximum rate allowed under the tax law, the depreciation 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.

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