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Thailand: Minimum wage deduction set to rise
The Finance Ministry will soon seek cabinet approval to temporarily raise tax-deductible expenses for the minimum wage paid to employees to 1.15 times from 1 at present, an adjustment that can absorb employment costs of 9-10 baht a day per employee if it wins the nod, says Finance Minister Apisak Tantovorawong.
The government will lose 5.7 billion baht in revenue from the higher tax deduction, Mr Apisak said.
The new rate of the tax-deductible item would take effect on April 1, when the daily minimum wage increases nationwide, and run through the end of the year, he said.
Only small and medium-sized enterprises (SMEs) with annual sales of at least 100 million baht can enjoy the tax privilege, and wages exceeding the minimum cannot be claimed.
The higher tax deduction is a measure to alleviate the impact on employers from the daily minimum wage hike, Mr Apisak said.
With the higher tax deduction, employers’ additional burden will be reduced to 10-12 baht per day per employee.
The tripartite national wage committee agreed on the increases after more than seven hours of talks last week, settling on a range of 5-22 baht, rising 1.64-7.14% from the base 300 baht.
The proposed hike will go before the cabinet soon.
After the new minimum wage is enacted, there will be seven wage rates: 308, 310, 315, 318, 320, 325 and 330 baht. The average minimum wage is 315.97 baht. While Phuket, Chon Buri and Rayong get the highest rate, the three southernmost provinces — Yala, Pattani and Narathiwat — will receive the lowest at 308 baht.
Mr Apisak said the latest wage hike is meant to create fairness after the minimum remained static for several years.
The country’s overall economy has improved, he said, so it is necessary to help all sectors receive an appropriate return.
Mr Apisak said any employers who hire low-income recipients of the government’s welfare and subsidies can deduct the wages paid from corporate income tax at 1.5 times.
Last year, 11.7 million recipients of the government’s welfare and subsidy scheme signed up. Five million of them were living below the poverty line, defined as annual income of 30,000 baht.
The Finance Ministry’s criteria for aid required applicants to be unemployed or to have had an annual income of 100,000 baht or less in 2016. Their savings, bonds or savings certificates must have been worth less than 100,000 baht in total.
If the applicants owned property, the area must not exceed 35 square metres for a condo unit, 25 square wah for a townhouse or 10 rai of land for agricultural purposes.
The Finance Ministry will send account officers to meet with all 11.4 million recipients to learn their financial information, skills and career goals and design the right tools to help them.
The cabinet earlier this month approved a 35.67-billion-baht budget for the second phase of the welfare and subsidy scheme for the poor, aiming to help 25% of the 11.4 million recipients cross the poverty line.
Accessibility to state financial sources, training courses to improve career skills and providing the four basic needs of living are the integral parts of the second phase.
Source: https://www.bangkokpost.com/business/news/1402210/minimum-wage-deduction-set-to-rise