Thai Government Reveals Company Tax Reduction Plans

by Mary Swire, Tax-News.com, Hong Kong

20 September 2001

Thailand's small and medium-sized enterprises (SMEs) are set to receive a cut in corporate tax in a bid to help them survive the country's floundering economy. Finance Minister, Somkid Jatusripitak, told the local press that the government has come up with further measures to help the companies including corporate tax exemptions for venture capital firms which invest in SMEs.

Somkid said the new taxes are imperative in order to assist the country's smaller companies. 'The government has implemented these measures to assist cash-strapped SMEs, a sector that has been long ignored,' the Minister explained.

The new measures decree that from January 1, 2002, SMEs with less than 5 million baht in registered capital and under 1 million baht in annual profits will be entitled to pay a lower corporate tax of 20 per cent as against the current rate of 30 per cent. Companies with 3 million baht in annual profits will pay 25 per cent and those with profits in excess of 3 million baht will be required to pay the full 30 per cent rate. To qualify for the tax exempt privileges, venture capital companies are required to be limited or listed companies with a minimum of 200 million baht in registered capital.

'SMEs are a crucial part of Thailand's long-term domestic economic growth,' said Somkid Jatusripitak. 'The tax reduction is aimed at providing SMEs with fresh funds for running their businesses as banks are reluctant to extend them credits.'

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