New depreciation rate and initial deduction allowed for computers, computer software and other assets of Small and Medium Enterprises (SMEs) and computers, computer software and machinery and equipment of all other juristic companies and partnerships

(20/2008)

The new depreciation rate and initial deduction apply to the following assets acquired on or after 7 August 2008:

Assets of SMEs

Under the Royal Decree, SMEs are defined to mean juristic companies and partnerships whose fixed assets, excluding land, have a value of no more than Baht 200 million and the number of employees is no more than 200.

(a) Computers acquired for the entity’s own business use are entitled to an initial depreciation of 40% of the total cost on the acquisition date. The remaining cost can be depreciated within 3 accounting periods starting from the acquisition date. For accounting periods shorter than 12 months, a proportionate adjustment must be made for the period and any generally accepted accounting method may be adopted.

Under this Royal Decree, Computers refers to automatic electronic appliances used as artificial intelligence to mathematically solve easy and complicated problems, including computer accessories related to appliances or components of computers, including computer software , which help them to function properly.

(b) Other assets which are by nature liable to wear and tear or depreciation excluding land and stock-in-trade under Section 4(5) of Royal Decree No 145 and which are acquired for the entity’s own business are entitled to depreciation of 100% of the total cost on the acquisition date. This applies to assets acquired during an accounting period, the total value of which does not exceed Baht 500,000. For any accounting period which is less than 12 months, a proportionate adjustment must be made for the period and any generally accepted accounting method may be adopted.

Depreciation under (b) is applicable to assets acquired only until 31 December 2010.

Assets of juristic companies and partnerships that do not qualify as SMEs

(a) Computers acquired for the entity’s own business use can be depreciated within 3 accounting periods starting from the acquisition date If any accounting period is less than the 12 months, a proportionate adjustment must be made for the period and any generally accepted accounting method may be adopted.

Note: The definition of computers is the same as under SMEs above, which includes computer software .

(b) Machinery and equipment acquired for the entity’s own business use are entitled to an initial depreciation of 40% of the total cost on the acquisition date. The remaining cost can be depreciated according to the normal depreciation method specified in Section 4 of Royal Decree No. 145 (B.E. 2527), which is a maximum of 20% per annum.

Depreciation under (b) is applicable to machinery and equipment acquired only until 31 December 2010.

It should be noted that companies that benefit from the depreciation method under this Royal Decree will not be permitted to take the benefit of the tax exemption on income equal to 25% of capital expenditure that is otherwise available under Royal Decree No. 460.