Car acquisition by a Thai companies: deductible expenses and VAT implications.

by Vincent / 2018-10-04 / Published in B-Accounting, Blog
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When a Thai company acquires a car, the company has to record the cost of the purchase as an asset and consequently depreciate the automobile over its useful life  (five years). However, according to the nature of the vehicles rules may differ. Indeed, the Revenue Department makes a difference between sedan auto and passenger vehicles which seat do not exceed 10 seats.

In order to limitate abusive behaviors from certain companies buying luxurious cars in order to take advantage of massive corporate income tax deductions,  the Revenue Department does not allow car deductions over a cost of 1 million baths. Consequently, any proportion of the automobile cost’s that is above this ceiling amount is considered as a disallowed expense.

In regard to the VAT, things are different. Contrary to passenger cars,  the Revenue Department of Thailand forbids the claim of VAT related to the acquisition of a sedan auto. It however allows you to absorb the VAT expense as an asset.

Although, applicable to car acquisitions, these limitations do not exclude leasing, hire purchases and rents. VAT can’t be claimed for such  regimes & monthly installments are limited to to Baht 36,000 (incl. VAT 7%).

 

 

To optimize your purchase and your Corporate Income Tax Liability, B-accounting has several solutions to propose if necessary. Feel free to contact us if needed.

 

Composed by a team of professional accountant, B-accounting proposes accounting services to foreign investors in Bangkok, Thailand. Feel free to contact us for a consultation.


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