Finance Ministry keen to reform income tax system
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THE FINANCE MINISTRY is speeding up its effort to restructure the personal-income-tax system, with details of an amendment to the Revenue Code expected to be approved by the Cabinet in March.
The ministry is studying whether to lower the tax ceiling or adjust the number of tax brackets.
Currently individuals earning less than Bt150,000 per year are exempt from income tax, while those making more than Bt4 million per year are currently subject to the top 35-per-cent bracket. The other tax brackets are 5 per cent, 10 per cent, 15 per cent, 20 per cent, 25 per cent and 30 per cent.
Prasong Poontaneat, director-general of the Revenue Department, said yesterday that any changes made to the personal-income-tax structure would benefit taxpayers.
The new structure will be considered by the Cabinet this quarter, then after Cabinet approval, the amendment will have to be considered by the National Legislative Assembly.
It should be effective one year from now.
Everyone should be happy, as all will benefit from the new structure, he said.
The government wants to lower the personal-income-tax rates in the seven brackets so that the country can attract more foreign investment.
It also wants to bring the personal-income-tax rates in balance with the corporate rate. The corporate income tax rate was cut to 20 per cent permanently last year.
Prasong said Thailand’s corporate-income-tax rate was now the second-lowest among Asean countries after Singapore’s 16 per cent.
By narrowing the gap between personal and corporate rates, the government hopes to gain more tax revenue, since many evade taxes by moving personal income to corporate income to pay the lower rate.
Expatriates in Asean countries have also preferred working in Singapore to Thailand because of the lower personal-income-tax rates.
To attract more foreign professionals and companies to set up regional offices and international trading headquarters in Thailand, the government plans to make both corporate and personal income-tax rates more competitive.
The Finance Ministry yesterday also released details of a tax amnesty for small and medium-sized enterprises. It includes incentives of a zero rate for the first year and a reduced rate of 10 per cent for the second year.
At the start of this year, a new vehicle tax also became effective based on emissions and aimed at protecting the environment. The new tax structure favours eco-friendly and small vehicles, which emit less air pollution.
Next month, Thailand’s inheritance tax will also become effective for the first time in decades, aimed at redistributing wealth even though collections are expected to be relatively small because of a low tax rate.
Another key element of tax reform is the real-estate tax. The proposal is still undergoing review by the economic team led by Deputy Prime Minister Somkid Jatusripitak.
