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Thailand: Deduction incentives to be reviewed
The Finance Ministry wants to reform the tax structure by revising the large number of deduction incentives, arriving at a more appropriate level.
As government expenditures have been increasing, the ministry is reviewing its tax reform policy to evaluate the extent of revenue losses from several tax deduction measures, said Finance Minister Arkhom Termpittayapaisith.
For instance, some individuals request tax deductions on personal income tax filings, but do not contribute further to the investments after making a claim.
Under the current personal income tax structure, taxable income of 150,000 baht or lower is exempt from taxation.
The rate is 5% for an annual income of 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% tax bracket is 2-5 million baht, and the income range for the top tax rate of 35% starts above 5 million.
Those liable for personal income tax can claim deductions on contributions to the Social Security Fund and provident funds, prenatal care and care of dependent children and parents, as well as investments made in retirement and long-term savings funds, life insurance and health insurance.
Free trade agreements also contribute to lower revenue collection, making the government search for alternative income sources to tax in order to earn sufficient tax revenue to fund the country’s development initiatives, said Mr Arkhom.
A hike in tax rates is part of the reform policy, he said, without elaborating on details of such a move.
Reducing the tax rate for investment projects approved under the Board of Investment has to be assessed, but one roadblock is foreign investors may not come and make outlays here without this tax privilege, said Mr Arkhom.
Although many nations are following a trend in cutting taxes, further studies of their tax structures are needed as some countries have a higher tax rate on the consumption of goods and services than Thailand’s 7% value-added tax, he said.
There were over 23 items applicable for personal income tax deduction in 2020, according to a source speaking on condition of anonymity.
Source: https://www.bangkokpost.com/business/2031719/deduction-incentives-to-be-reviewed