Expenses related to the destruction or disposal of obsolete, damaged, or expired inventory (write-off of disposed material) can be deducted for Corporate Income Tax (CIT) in Thailand. This deduction accounts for the loss in value of inventory that can no longer be sold or used.

Strict procedures must be followed to demonstrate that the inventory was indeed destroyed and not diverted.

General Criteria CIT Deductibility

• The inventory must be genuinely unsaleable or unusable due to damage, obsolescence, or expiry.
• The destruction process must be verifiable and transparent.
• Proper accounting records must reflect the inventory write-off.
• The destruction should be witnessed, ideally by independent parties, to prevent fraud.
• Must comply with environmental regulations for disposal.

Documentation Needed For CIT Deduction

• Detailed inventory records (stock cards, inventory lists) showing the items to be destroyed.
• Internal approval for inventory write-off and destruction.
• Destruction certificate or report, including date, method, and quantity destroyed.
• Witness statements (e.g., from company staff, auditors, or external parties).
• Photos or video evidence of the destruction process (highly recommended).
• Disposal receipts from waste management companies (if applicable).

Bonus Hint (VAT Implication):

Notify the Revenue Department of the planned destruction 30 days in advance, otherwise the inventory might be deemed as a “sale” (even if no money is received) and Output VAT might be levied based on the inventory’s market value.