Many customers have inquired about the guidelines and procedures for managing the destruction of goods. Today, NP GREEN provides relevant information for your reference.
Customs Order No. 79/2541
To guide customs officers in inspecting and advising on the tax treatment of corporate income tax for the destruction of defective goods, goods of poor quality, outdated goods, expired goods, and scraps, the Customs Department issues the following directives:
Clause 1: Unless otherwise specified,
(1) "Defective goods" refers to goods generated in the production process efficiently under the production method, which has specified the rate of waste considered as the normal rate of the production method.
(2) "Excessive defective goods" refer to defective goods generated more than the normal rate specified under the efficient production process.
(3) "Scraps" refer to remnants of materials generated from certain types of production processes, which may have measurable value but are in small quantities.
Clause 2: The evaluation of costs or expenses of companies or juristic partnerships for products of good quality should consider the normal defective goods generated from the production process as part of the product's cost of goods sold.
Clause 3: Regarding the expenses incurred by companies or juristic partnerships for excessive defective goods, goods of poor quality, outdated goods, expired goods, and scraps from the production process, if the companies or juristic partnerships intend to deduct these costs as expenses in calculating the net profit for the accounting period in which the destruction occurs, they must adhere to the following criteria, methods, and conditions:
(1) In the case where companies or juristic partnerships are in export processing zones, they shall follow the procedures for the destruction of defective goods, goods, and scraps specified by the Industrial Estate Authority of Thailand and invite accountants to witness the destruction or prepare destruction reports for the accountants' acknowledgment. In this regard, the accountant must certify it by attaching it to the balance sheet.
(2) For companies or juristic partnerships that have received investment promotion and have imported raw materials for production for export under the control of the Board of Investment, in the destruction of raw materials, they must adhere to the criteria, methods, and conditions specified by the Board of Investment and invite accountants to witness the destruction or prepare destruction reports for the accountants' acknowledgment. In this regard, the accountant must certify it by attaching it to the balance sheet. As for the destruction of goods other than the aforementioned raw materials, they must follow the criteria, methods, and conditions as in (3).
(3) For other companies or juristic partnerships:
(3.1) The destruction of goods or scraps that cannot be stored in their original condition, such as food products, medical supplies, chemicals, etc., the companies or juristic partnerships must follow the criteria, methods, and conditions as follows:
(a) Inspection must be conducted to determine whether the goods are damaged according to the conditions specified by each business, and approval must be obtained from the authorized person to consider them as damaged goods according to the specified conditions. In the case of returned goods, the companies or juristic partnerships must have documentary evidence of the returned goods, specifying details such as the date of return, quantity, type or code of goods, reason for return, reference number of the order for the returned goods, and the customer's signature along with the employee who received the returned goods. When storing the returned goods awaiting destruction, the warehouse personnel must conduct a physical count and sign the label, notifying the accounting department.
(b) Once approval has been obtained to destroy defective goods, goods, or scraps from the authorized person, at least one person from the warehouse, accounting, sales, or inspection department (if any) must witness the destruction and sign as witnesses for accounting purposes. Accountants should also be invited to witness the destruction. In this regard, companies or juristic partnerships are not required to notify the officials of the Customs Department to witness the destruction.
(3.2) For goods or scraps that can be stored and destroyed simultaneously in sufficient quantities, companies or juristic partnerships must comply with (3.1) and notify the local or provincial revenue office or provincial revenue office (branch) responsible area 30 days before the destruction date. The revenue office or provincial revenue office (branch) may send officials to witness the destruction as appropriate.
Clause 4: Any regulations, rules, orders, replies to inquiries, or guidelines that contradict or conflict with this directive shall be deemed null and void.
Issued on November 3, 2541
Colonel Suchart Chaowiwat
Director-General, Customs Department
Source: https://www.rd.go.th/publish/3575.0.html
For further information regarding the destruction of goods, chemical disposal, and confidential data destruction, you can contact us at:
Phone: 085-151-9678 or 096-164-4041
Email: info@npgreen.com
Line ID: @npgreen
