Finance Ministry focuses on 10 key issues for tax reform

The Thai Chamber of Commerce (TCC) has urged the government to complete its tax reforms within one year, and wants the private sector in on the process.

Speaking at a seminar on “Drive for Tax Reform: Private Participation” organised by the Thai Chamber of Commerce, Warotai Kosolpisitkul, deputy director-general of the Fiscal Policy Office, noted that tax revenue now accounted for only 17.2 per cent of Thailand’s gross domestic product, while the government was spending more for investment and was facing an ageing society.

Thus reform is required to ensure social equality and to bring the tax-revenue proportion up to 20-21 per cent of GDP. The tax reforms under the Finance Ministry’s consideration target 10 key issues.

Thailand needs to enhance its competitiveness, while attracting investors with an easier tax system through cuts of several withholding-tax rates.

The government’s revenue base must be built up, although there is no plan yet to raise the rate of value-added tax from the current 7 per cent. The ministry will review VAT-exempt items for higher equality.

While the excise-tax law requires amendment to accommodate the planned change from ex-factory prices to retail prices as the base, tax-collection administration must be made more efficient through information technology and e-payment. 

Social equality must be built up, likely with the use of a negative income tax, along with inheritance and gift taxes to come into force in February.

Personal income tax will be adjusted to cope with the global economic mechanism and tax measures for society and the environment will be used.

The Cabinet agreed on the legal draft on the tax reform in late May. 

Kitipong Urapeepatanapong, chairman of a tax committee at the TCC, urged the government to open opportunities for the private sector to join in the legal amendment process in order to bring the reforms into play quickly. He wants the private sector to join a working group on tax reform and tax-system adjustments set up recently by Deputy Prime Minister Somkid Jatusripitak.

This group should work full-time and adjust previous proposals along the lines of best practices in Singapore for faster reform, Kitipong said. 

He foresees the reform being completed within one year or 15 months at the most before the military-led regime ends its term 20 months from now.

“The private sector sees that the tax reform could happen in this government. Several taxes need to be restructured. For example, personal-income-tax rates should be at the same level as corporate income tax. Others include tax exemptions for the Board of Investment,” he said.