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Thailand: Hunt for new tax streams underway
Prasong Poontaneat, the finance permanent secretary, has delegated the Revenue Department to seek other tax sources to offset forgone revenue in the event that the Palang Pracharath Party’s populist manifesto to cut personal income tax comes into force.
A 10% cut across brackets is possible, but the department must analyse which parts of personal income tax can be reduced, said Mr Prasong, who also chairs a committee to revamp the Finance Ministry’s tax structure.
He did not clarify whether the personal income tax cut study would be completed this year.
Fairness to individual taxpayers and corporate firms is the Finance Ministry’s focus, as well as welfare, he said. A decline in tax income could lead to diminished welfare availability for citizens.
Mr Prasong said the ministry will study social welfare in European countries, whose people are willing to pay higher taxes in return for living allowances that are sufficient to let them live comfortably after retirement.
Many Thais do not want to pay taxes, but they want a good welfare system, he said.
Thailand has low-, middle- and high-income earners, so it needs to prudently consider fairness when making changes to the tax structure, Mr Prasong said.
Although the corporate income tax rate stands at 20%, the effective tax rate is 28% when the withholding tax on dividends paid to shareholders is taken into consideration, he said, adding that the 28% rate is close to the 29% paid by individual taxpayers who are taxed at the 35% ceiling and take full advantage of available tax breaks.
Under the personal income tax structure that has been enforced since the 2017 tax year, taxable income of 150,000 baht or lower is exempt from tax. The rate is 5% for 150,001-300,000 baht, 10% for 300,001-500,000 baht, 15% for 500,001-750,000 baht, 20% for 750,001-1 million baht and 25% for 1,000,001-2 million baht.
The income band for the 30% bracket is 2,000,001-5 million baht, and the range for the top rate of 35% starts at above 5 million baht.
Mr Prasong said the committee tasked with the tax overhaul held its first meeting recently and assigned each tax-collecting agency to review areas to be fixed and identify obstacles that need addressing.
The committee agreed that the Revenue, Customs and Excise departments should be synchronised so their taxation is aligned, but talks are needed before a clear solution can be reached, he said.
Source: https://www.bangkokpost.com/business/1750944/hunt-for-new-tax-streams-underway