Depreciation is an accounting method used to allocate the cost of a tangible asset over its useful life.

For Corporate Income Tax (CIT) purposes in Thailand, companies can deduct depreciation expense for company-owned cars.

However, there are specific limitations, particularly for passenger cars, that restrict the deductible amount for tax calculation, regardless of the car’s actual cost.

General Criteria CIT Deductibility

• The car must be owned by the company and registered in its name.
• The car must be used for the company’s business operations.
• Depreciation must be calculated using a generally accepted accounting method (e.g., straight-line method).
• Passenger cars (with seating capacity not exceeding 10 persons): The depreciable cost base for tax purposes is limited to a maximum of THB 1,000,000. Any cost exceeding this amount is not allowed for tax depreciation. The maximum annual depreciation rate is 20% (over 5 years).
• Other types of motor vehicles (e.g., trucks, vans with more than 10 seats) have no such cost limitation and are generally depreciable at 20% per annum.

Documentation Needed For CIT Deduction

• Car registration document (copy).
• Purchase invoice or agreement for the car.
• Proof of payment for the car.
• Fixed asset register with details of the car, cost, and depreciation calculation.
• Company’s depreciation policy.

References

• Thai Revenue Code, Section 65 bis (2)
• Royal Decree No. 145 (B.E. 2525)