ASEAN KEY DESTINATIONS
Thai ministry proposes lower corporate tax rate
Sathit Rungkasiri, director-general of the Revenue Department, said that only 200 to 300 companies held BoI investment privileges that included a five-year corporate income tax waiver. He said the idea is to create a fairer tax structure for all businesses.
"If we remove the BoI tax privileges for those companies, it would allow the country to reduce the rate to 18 percent from 30 percent, keeping our revenue at 200-300 billion baht per year," Mr. Sathit said.
Also under this model, personal income tax would be cut to 25 percent from a progressive rate of 5-37 percent, with the value-added tax remaining at 7 percent, as this would not change tax revenue.
At the seminar "Resetting Thailand: Tax Reform" held in Bangkok yesterday, Mr Sathit noted this was only a model the department was now studying.
"The tax structure hasn't been reformed for 20 years, and expanding tax revenue doesn't always mean raising the tax rate," he said. "We can maintain or even reduce some rates, but we have to develop a system that prevents tax avoidance."
Another option would be to keep the BoI incentives but only for strategic businesses. The Customs Department also wants to reform its tax structure by raising the rate for items that provide high revenue but are easily processed instead of collecting tax on many items that require high cost and effort but contribute low revenue.
Guenther Wilhelm Nadolny, managing director of SET-listed Vinythai Plc and chairman of the Asean Vinyl Council, said the timing may not be right for abolishing the BoI's corporate income tax holidays.
"BoI incentives are strategic investment strategies for Thailand to attract certain types of industries such as modern PVC manufacturing or environmentally friendly industries that did not exist elsewhere. You offer the incentives because the country wants them to come here," he said. "You have to decide what is the priority of the country."
He also suggested Thailand should look at the investment promotion policies of neighbouring countries to make sure its competitiveness is not affected.
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