The flood situation in lower southern Thailand covered at least 9 provinces. By the end of November, 2025, the region was mainly the Hat Yai District of Songkhla Province. This incident caused extensive damage and the whole buildings, houses, enterprise facilities and tools used for business, including a large number of property and goods were flooded or lost. 

The government and relevant departments have introduced a number of relief and recovery measures to meet the needs of damaged enterprises in this area, such as paying compensation, loans with no interest or low interest, debt moratorium easing insurance conditions and the acceleration of compensation payments, and tax relief measures.

From this situation, from the perspective of the affected corporate entity, some damages are covered by insurance while others are not. How are the criteria determined to determine which items are tax-deductible expenses, and how should the income received from insurance claims be recorded correctly according to the Revenue Department’s criteria. 

According to Section 65 ter (12), “Recoverable Damages Due to Insurance or Any Indemnity Contract,” which discusses the damages incurred and the compensation received from the insurance company and how to record them correctly? 

Recoverable damages under insurance or any indemnity contract, there are two cases: 

1. Case where insurance is insured – It cannot be recorded as an expense according to Section 65 ter (12). It must wait until the insurance company notifies the compensation for the damages. This is divided into: 

1.1 If the insurance company notifies compensation that is less than the damages incurred, the difference can be recorded as a tax expense in the accounting period in which the insurance company notifies the compensation. 

For example, on November 22, 2025, Company A experienced a flood in its warehouse in Hat Yai District, causing damage to goods worth Baht 5 million. The company had insurance with an insurance company. Subsequently, the insurance company notified us of the settlement on December 30, 2025 in the amount of Baht 3.5 million. In accounting, the company recorded the damages as Baht 5 million and the accrued income from the insurance company as Baht 3.5 million in the 2025 fiscal year. For tax purposes, the company can record the difference of Baht 1.5 million as a tax-deductible expense in the 2025 fiscal year.

1.2 If the insurance company claims compensation exceeding the actual damage, the consideration should be divided into two cases:

Case 1: Property damage (according to Royal Decree No. 527, Section 4). For income received as compensation from an insurance company due to floods, storms, fires, or other natural disasters occurring in Thailand, the difference is considered tax-exempt income. 

Case 2: Other damages, such as goods or property damaged in general incidents, the difference is considered taxable income in the accounting period in which the insurance company claims compensation. 

For example, on November 22, 2025, Company B’s warehouse in Hat Yai District was flooded, causing damage to the property with a remaining book value of Baht 1 million at the time of the incident. The company had insurance with an insurance company, and the insurance company claimed compensation of Baht 1.2 million on December 30, 2025 for the property damage. Company B can claim the following tax benefits: 

In the case of property damage, Company B received compensation exceeding the actual damage by Baht 0.2 million. This is considered tax-exempt income in the 2025 fiscal year. 

2. Case where no insurance was made: The entire amount can be recorded as an expense in the accounting period where the damage occurred, using evidence such as a police report or daily log. The expense can be claimed in the accounting period in which the report was filed. 

For example, on November 30, 2025, Company C experienced a fire at its office building. The company filed a police report and recorded a daily log on December 1, 2025. The company did not have insurance. The office building had a remaining book value of Baht 6 million at the time of the incident. Therefore, the entire amount of the damage is considered a tax-deductible expense in the 2025 fiscal year. 

Corporate entities suffering damage from the aforementioned cases can apply these principles to ensure that their annual corporate income tax calculation is correct according to the conditions of the Revenue Code. 

Author: Chutharat Suknoi, 

Audit Manager, Dharmniti Auditing Co., Ltd. 

Source: Revenue Department, tax-ez.info, Thairath Online, LH Bank