What Are Non-Deductible Expenses, and Why Business Owners Need to Know in 2026

Non-deductible expenses under the Revenue Code are costs that the business actually paid but which the Revenue Department does not allow to be deducted as expenses when calculating net profit for corporate income tax. If business owners in Chiang Mai looking for an accounting service in Chiang Mai do not check carefully, they may unintentionally end up paying more tax, together with retrospective surcharges and penalties.

Understanding this is extremely important for businesses of every size, because even if you genuinely paid the money and have complete documents, if the item falls within the legal definition of a non-deductible expense, recording it incorrectly leads to the risk of being called in for a tax assessment. Having a professional team look after this is the safest option for business owners today.

Why Pay Attention to Non-Deductible Expenses before the 2026 Year-End Close?

Distinguishing expenses for tax purposes is the most important part of financial planning. If you record everything as an expense without screening, these non-deductible expenses will be added back to recalculate the tax, and business owners often overlook this until the tax actually payable is higher than planned.

Using a tax planning service with an expert accounting firm helps you screen these items at the source, reduces the risk of a retrospective audit by the Revenue Department, and makes your business's cash flow management more accurate.

Common Types of Non-Deductible Expenses (2026 Checklist)

In the work of our accounting team in Chiang Mai, we often find errors where business owners believe an item is deductible when it is in fact a non-deductible expense, as follows:

  • Personal expenses: Costs not directly related to running the business, such as family expenses, children's school fees, or the owner's personal holidays
  • Capital expenditure: The purchase of fixed assets, which is not a periodic expense but must be depreciated under the conditions set by law
  • Expenses with an unidentifiable recipient: Costs without a receipt or proof of payment that clearly identifies the recipient
  • Reserves and provisions: Money set aside for future payments that have not yet actually occurred
  • Tax penalties: Fines or surcharges paid to the Revenue Department for breaking the law cannot be deducted

Common Mistakes in Bookkeeping and Document Management

The most common mistake is mixing "personal expenses" with "company expenses", which causes problems at the year-end close. If you want a good management system, choosing the right tools is a good starting point. You can read about the POS program for shops, which manages stock and records sales systematically (free with the monthly accounting service), so that data is separated clearly right at the point of sale.

Storing documents digitally and consulting the team via LINE makes working together smoother. The team will check which expenses should be classified as non-deductible, so that you file your taxes as correctly and transparently as possible.

Frequently Asked Questions

Are customer entertainment expenses non-deductible?

Entertainment expenses are not entirely non-deductible, but they must meet the conditions set by law, such as evidence of the recipient's name and the purpose of the entertainment, and the deduction must not exceed the rate specified by law.

Can goods bought for cash without a tax invoice be deducted as an expense?

If there is no receipt clearly stating the seller's name, the date and the details of the goods, that expense is immediately treated as non-deductible, because the recipient of the payment cannot be proven.

Can a non-deductible expense that has already been added back be deducted next year?

No, because non-deductible expenses are items the law never allows to be deducted. Preparing correct documents from the start is therefore the best protection.

Summary

Understanding non-deductible expenses in 2026 is the key to helping your business grow sustainably and reducing future tax risk. If you are looking for a partner to handle your accounting and tax professionally through a modern online system, we are ready to help your business move forward with confidence.

Contact YMTD Accounting Partner Chiang Mai for complete accounting and tax advice: tel 081-542-3019 / LINE: @ymtd