Draft of Tax reform for year 2012 (3 - Special corporate tax rate for reviving)

Tuesday, April 24, 2012 9:09

In order to meet with the international standards concerning the allocation of the depreciation expenses over the life of the assets, the 200% depreciation rule (new rule) shall, in principle, be applied to the assets acquired after April 1, 2012. For the assets acquired before April 1, 2012, the 250% depreciation rule (old rule) is used. The difference between the 200% depreciation rule and the 250% depreciation rule is that the depreciation rate has been changed (see table 1). However, the depreciation method remains the same. The impact of such change is that the depreciation expense of the first half is less, and the latter half is greater than the old rule (see table 2 and chart below).  

<Table 1> Compare Deprecation rates between 250% and 200% Depreciation rule:  

<Table 2> Compare depreciation expense of each year between 250% and 200% Depreciation rule:  

<Chart>

Note: the calculation above is just for the purpose of illustration. In practical, the calculation is using not only the deprecation rate, but also the revised rate when the depreciation expense amount using the depreciation rate is less than the expense amount using the guaranteed rate.