Treatment of rental property income and expense

In its May 2019 newsletter, the Thailand Federation of Accounting Professions (“TFAC”) issued a statement saying that the Revenue Department (RD) issued Departmental Regulation No. Tor. Por. 299/2561 to amend Clause 3.4 of Departmental Order No. Tor. Por. 1/2528. The objective of Tor. Por. 299/2561 is to eliminate differences between the recognition of revenue from and expenses for a rental property for accounting and tax purposes, for both the lessor and the lessee of the property.

Keywords: Mazars, Thailand, Accounting, Rental property, TFAC, Revenue Department, Departmental Regulation, Departmental Order

12 June 2019

Thai Accounting Standard No. 17

New regulation – Tor. Por. 299/2561

Operating leases

Operating leases

For a corporate lessor

Lease income from operating leases is recognized in income on a straight-line basis over the lease term, unless another systematic basis is more representative of the manner in which the benefit derived from the leased asset is diminished over time.

For a corporate lessor

The rental or instalment income and related expenses must be included in the computation of income and expenses in each accounting period in proportion to the period of time that the property is rented, or on another suitable basis under generally accepted accounting methods.

For a corporate lessee

Lease payments under an operating lease shall be recognized as an expense on a straight-line basis over the lease term, unless another systematic basis is more representative of the manner in which the user benefitted.

For a corporate lessee

The rental expenses or the instalment payment and related expenses in the tax computation of each accounting period must be calculated in proportion to the period of time that the property is rented, or on a suitable basis under generally accepted accounting methods.

In addition, the new regulation also specifies that, where both the corporate lessor and lessee have chosen a method for computing income and expenses for determining the net taxable profit, the method must be applied consistently, except where approval to change the method of computation has been obtained from the Director-General of the Revenue Department. This new regulation is applicable retroactively to accounting periods commencing on or after 1 January 2018.

For more information, please visit Federation of Accounting Professions website .

Want to know more?