| Comparison Criteria | Accounting Depreciation | Tax Depreciation |
| Calculation Criteria | Based on professional judgment and an assessment of the actual benefits the business will receive (e.g., estimating the actual useful life of a machine). | Must comply with the rules, methods, and conditions prescribed by law (e.g., Royal Decree No. 145). |
| Depreciation Rate / Ceiling | Based on the actual useful life of the business (which may be shorter or longer than tax depreciation). | Clearly defined maximum rate ceilings (e.g., permanent buildings not exceeding 5% per year, general assets not exceeding 20% per year). |
| Cost Basis for Calculation (e.g., Passenger Cars) | Uses the actual total cost of purchase (including VAT or accessories according to accounting standards). | For passenger cars or vehicles seating no more than 10 people, tax law limits the cost basis for calculation to not exceed 1 million Baht (unless other conditions apply). |
Summary of the Differences Between Accounting Depreciation and Tax Depreciation:
- Accounting Depreciation: Focuses on reflecting the asset’s value according to business reality, based on the actual useful life and utilization of the business to ensure appropriate financial statements.
- Tax Depreciation: Focuses on compliance with laws and rate ceilings set by the Revenue Department (e.g., capping the maximum rate for permanent buildings at 5% or limiting the cost of passenger cars to 1 million Baht).
Practical Result: When the depreciation figures from both methods are unequal (e.g., accounting depreciation is faster than tax depreciation), the accountant must “add back” the excess amount to the net profit when calculating annual corporate income tax (P.N.D. 50).
| Depreciation Calculation (as prescribed by the Thai Revenue Department) | ||
| Item | Depreciation Rate (%) | Remarks |
| 1. Land | Not depreciated | Land is not subject to depreciation. |
| 2. Buildings | ||
| ▪ Permanent buildings | 5% (20 years) | Straight-line depreciation over 20 years. |
| ▪ Temporary buildings | 100% (1 year) | Fully depreciated in the first year. |
| 3. Cost of acquiring depletable natural resources | 5% (20 years) | Depreciated over 20 years. |
| 4. Cost of acquiring leasehold rights | ||
| ▪ No written lease agreement or renewable lease without a fixed term | 10% (10 years) | Depreciated over 10 years. |
| ▪ Lease with a specified term | Based on lease term | Depreciated over the contract period. |
| 5. Cost of acquiring rights, goodwill, trademarks, business licenses, patents, copyrights | ||
| ▪ Unlimited useful life | 10% (10 years) | Depreciated over 10 years. |
| ▪ Limited useful life | Based on useful life | Depreciated over the usage period. |
| 6. Other assets | 20% (5 years) | Includes computers, office equipment, furniture, etc. |
