Who benefits from the amendments to a tax law

However, in February 2016, the government announced that the reduction in the progressive PIT rates would be extended to the 2016 tax year with Royal Decree no 600. These are the same PIT rates which were initially reduced temporarily in 2013 and were extended each year, so this Royal Decree merely provides an extension of these rates.
Better news came in April 2016, when the Cabinet approved the Ministry of Finance's proposal to amend PIT law, which would be a big shift as the last amendment was some 25 years ago.The major changes in the PIT law include an increase in the standard expense deduction from 40 per cent, but not exceeding Bt60,000, to 50 per cent, and not exceeding Bt 100,000 for employment income (Section 40(1) and (2)) and for income from copyright, good will and other rights (Section 40(3)).
In addition, the personal allowance for a taxpayer and spouse will be increased from Bt30,000 to Bt60,000 each. Furthermore, child allowance will be increased from Bt15,000 per child, up to three children to Bt30,000 with no limit on the number of children.
Under this proposal, the allowance for child's education of Bt2,000 each will be cancelled , so a taxpayer who has a child in school will get an additional child deduction of Bt13,000 instead of Bt15,000 per child. Looking at the increased amount of expenses and allowance deductions, the changes may not be much for a high-income earner but a low or middle income earner should benefit from these changes.
Under the new proposal, a single taxpayer with an income of less than Bt26,000 per month will not have income tax liability, compared to the existing law where a single taxpayer will start paying PIT if his income exceeds Bt20,000 per month. Note that the tax exemption for annual wage income below Bt 150,000 remains in place; this effectively adds a 0 per cent rate on wages below Bt150,000.
 The change includes the expansion of tax base subject to 30 per cent, which applies to taxable income over Bt2 million but not over Bt4 million to be not over Bt5 million.
Thus the top rate of 35 per cent will apply to taxable income which is greater than Bt5 million instead of the Bt4 million under the existing PIT rates. This will benefit high-income earners who will save up to Bt50,000 in tax.
It is expected that this proposed change will be effective starting from the 2017 tax year onward.
Although the proposed changes may not seem revolutionary, this is still exciting news as there has been no adjustment in the expenses and allowance deductions for the last 25 years. However the Thai government may still need to take notes from the PIT laws of neighboring Asean countries and consider further reductions of PIT rates in order to enhance Thailand’s competitiveness in light of the AEC's free flow of labour. Currently, Thailand's PIT rates are on the high side among Asean members.

Benjamas Kullakattimas, |KPMG in Thailand, May 2016.