Kittiratt rejects call for tax waiver
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Low corporate rate, impact cited
Finance Minister Kittiratt Na-Ranong yesterday gave the thumbs down to the private sector’s request for a tax exemption for overseas dividends, saying corporations already enjoyed a low income-tax rate.
“We have to think very carefully about the impact of the tax exemption for dividends that Thai firms receive from their investments abroad,” he said in response to the Thai Chamber of Commerce.
He also yielded to the Constitution Court’s ruling on Wednesday that allows married woman to file a personal income-tax return separately from their spouse.
The business club on Wednesday argued that the previous administration of Abhisit Vejjajiva had agreed in principle to the overseas tax exemption as a way to encourage companies to invest more in other countries. The TCC wanted Kittiratt to explain why the current government of Prime Minister Yingluck Shinawatra did not approve the measure.
Under current tax law, companies based in Thailand have to withhold 10 per cent in taxes on dividends repatriated from their foreign subsidiaries.
Kittiratt, who is also a deputy prime minister, said the government had already cut the corporate income tax from 30 per cent to 23 per cent this year and would drop it to 20 per cent next year. The new corporate tax rate is relatively low and will benefit private firms.
“It may not be unjustifiable that the government has to lose revenue from the tax levied on dividends,” he said.
If the Finance Ministry allows the waiver, Thai firms may relocate their production bases to other countries to keep tax payments at a minimum, he added.
In another development, the Constitution Court said Section 57 of the Revenue Code, which forces married women to combine their income with their husband’s for annual tax calculations, violated their basic rights as stated in the charter.
The court also said the tax law discriminated against married woman as they have to pay more taxes than single women.
Kittiratt said the ruling would lead to some losses for the Revenue Department.
Section 57 had required married women to combine their non-earned income with their husband’s income. That resulted in paying more tax because of the progressive rates, with higher income taxed at a higher rate. Married women were allowed to file separate returns only for their earned income – salaries, wages, bonuses and other benefits from employers.
The department recently moved to allow married woman to file separate returns but was a bit slower than the court.
The court order will take effect next year.
According to personal-income-tax rates, annual incomes of Bt150,001 -Bt500,000 are taxed at 10 per cent, Bt500,001-1,000,000 at 20 per cent, Bt1,000,001-Bt4,000,000 at 30 per cent and more than Bt4,000,000 at 37 per cent.
