You can lose more than double that you think!
Buy a brand new Mercedes Benz off-the-shelf for P 1 million, use it for 4 years and sell it for P 600,000.
You think you lost P 400,000 and you further think that you are fine with that loss or “expense” for using it for 4 years – P 100,000 a year.
In reality, your loss is not only P 400,000 but also another P 313,500 (more than 75%) because of additional taxes that you will pay for expensive cars plus the other P 200,000 (50% more) for lease interest, if you lease at 5% flat interest. So, your loss or “expense” for using it for 4 years is P 913,500 or P 228,375 per year. It is not P 400,000 loss but P 913,500 loss.. This is more than double than what you normally think. Here is the calculation in Botswana Pula :-
Purchase/Sale Price of big car
|Less: Deemed Cost||(175,000)||(175,000)|
|Add: Disallowed Costs||175,000|
|Tax paid for expensive cars||181,500||132,000||313,500|
|If you lease it at 5% flat interest||200,000||200,000|
|Total loss / “expense” for 4 yrs||913,500|
|Total loss / “expense” for 1 yr||228,375|
|Total loss / “expense” monthly||19031|
Please think twice before you buy. You get taxed not only for the excess of purchase price but also for the excess of sale price.