SMEs that agree to join tax system to enjoy one-year exemption

The Cabinet approved the incentives yesterday as part of a tax amnesty to encourage more SMEs, which total more than 2.7 million or 96 per cent of Thai enterprises, to enter the tax system.

The Finance Ministry said SMEs that joined the programme would also not be investigated for back taxes.

An SME is defined as a business that reports sales and other revenues of Bt500 million or less per year.

At present, the corporate income tax rate is 20 per cent.

The tax-deduction measure is aimed at SMEs with registered capital of no more than Bt5 million and annual revenues of Bt30 million or less.

"The measures will help create a level playing field for all businesses, and establish the tax base so that we might not have to increase the tax rates in the near future," Finance Minister Apisak Tantivorawong said.

He said the National E-Payment Master Plan, which has already been approved by the Cabinet, would make it harder to avoid paying taxes, since every transaction will be recorded electronically in the future.

It is estimated that a 10-per-cent rise in the number of tax-paying enterprises will result in an extra Bt5 billion in tax revenue per year.

The tax amnesty will become effective on Friday, after which companies that fail to register for tax payment between January 1, 2016, and December 31, 2019, will not be able to apply for loans from commercial banks, since the banks will then require a tax record before considering a loan.

Meanwhile, the Bank of Thailand (BOT) has approved a new inflation target of 1-4 per cent, with the figure for next year expected to be in "the lower range" of that target.

The BOT also said it would continue to use various and mixed monetary tools, including interest and exchange rates, to provide support for the economy with "the main objective of allowing the economy to grow to its full potential".

Budget Bureau director Somsak Chotrattanasiri has said Bt792.927 billion, or 29.15 per cent of the 2016 fiscal budget worth Bt2.72 trillion, had been spent as of December 25. That is 1.31 per cent more than the target disbursement rate. A total of Bt73.895 billion, 24.78 per cent of the Bt390-billion investment budget, has also been disbursed.

The Cabinet also approved an extension of the contract-signing period for all three types of government investment projects within the 2016 budget (less than Bt1 million, more than Bt1 million but less than Bt2 million, and more than Bt5 million but less than Bt500 million), from within the first quarter of fiscal 2016 (October-December 2015) to the end of next month. The extension is meant to increase the efficiency of the disbursement of the government’s investment budget.