What are the regulations on the depreciation period for passenger cars?
2 Answers
The depreciation period for passenger cars is 5 years, with a residual value rate of 5%. Below is expanded information on the depreciation period regulations: 1. Depreciation regulations: The tax law stipulates the following on the depreciation period of fixed assets (minimum depreciation period): houses and buildings are 20 years; trains, ships, machinery, mechanical equipment, and other production equipment are 10 years; electronic equipment and transportation vehicles other than trains and ships, as well as tools, furniture, etc. related to production and operation, are 5 years. The residual value ratio is uniformly set at 5% of the original price. 2. Passenger cars according to tax law: depreciation period is 5 years, residual value rate is 5%. 3. Used car depreciation regulations: the depreciation period is also calculated from the date of purchase, lasting 5 years.
When it comes to the depreciation period of small cars, we finance professionals know it best. The tax law stipulates that the minimum depreciation period for small cars is 4 years, as clearly stated in the Corporate Income Tax Implementation Regulations. In my daily accounting work, the most common practice is to calculate depreciation using the straight-line method over four years, with a residual value rate of around 5%. However, there are some details to pay attention to in practice. For example, if a company buys a luxury car exceeding 1.3 million yuan, additional adjustments to depreciation calculations are required for tax purposes. I've seen too many small and medium-sized business owners deliberately depreciate over four years for tax deductions, saving significant tax expenses in the early years. But if the actual vehicle usage period is longer, such as for transport fleets, the depreciation can be extended to 6 years, which is also allowed by tax authorities. In short, it's essential to handle it flexibly based on the company's situation, ensuring both compliance and reasonable tax reduction.
