Thailand Ready to Cut Business Taxes
July 26, 2011 Taxation in Thailand
Thailand could soon see a significant decrease to its corporate income tax rate, as the Revenue Department indicates its readiness to slash the tax on the government’s signal.
According to a statement made by the director general of the Revenue Department of Thailand Satit Rungkasiri on July 25th, the Department is now ready to implement a cut to the country’s corporate income tax rate, as was proposed by the newly elected Pheu Thai Party. Although, the Revenue Department is also recommending that an increase to the national value added tax (VAT) rate be instated, in order to compensate for any losses in revenue.
On July 3rd the Pheu Thai Party of Thailand won the country’s general election, gaining 265 of the 500 seats in the House of Representatives. The party campaigned on a promise of slashing the national corporate tax rate if it wins the election.
In line with the ruling party’s promises, Satit Rungkasiri said that the Revenue Department is ready to immediately cut the corporate tax rate from the current 30 percent to 23 percent. Preparations are also underway to carry out the long term plan of cutting the rate by an adittional 3 percent when economic conditions allow.
According to the Revenue Department’s estimates, the rate cut will result in tax revenue losses of approximately THB 150 billion (USD 5.04 billion), although the move would improve the national economy and greatly increase levels of foreign direct investment into Thailand. Satit Rungkasiri recommended that the government should also consider raising the current 7 percent VAT rate, as the economy expands. He added that since many consumer necessitates are already VAT exempt, a tax increase would not have a large negative effect on low income earning taxpayers.
In conjunction with the impending tax changes, the Revenue Department is also planning to increase tax collections efficiency and national tax compliance, by establishing new information infrastructure between the Bank of Thailand and the Commerce Ministry. Once the project is complete the Revenue Department will have real-time information regarding business transactions carried out in the country.
Photo by DarkB4Dawn