Thailand Considers Radical Tax Reforms

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

30 September 2011

In addition to recently-announced plans to increase national minimum wages and reduce corporate income tax rates, and to provide a tax break for first-time home buyers, Thailand’s Finance Minister, Thirachai Phuvanatnaranubala, has disclosed that the new government is undertaking a review of the whole of the country’s tax code.

During a press conference covering a range of issues, Thirachai was reported as saying that tax reforms would take in the results of on-going reviews into personal income, corporate income and consumption taxes. The government has already confirmed that, to compensate for the increased minimum wage, the current 30% corporate income tax rate will initially be cut to 23% in 2012, and to 20% in 2013.

He indicated that the government was also considering changes to personal income tax deductions, together with individual tax compliance. It has been said that only 9m individuals file an annual tax return, with a mere 2.5m liable to tax net of deductions. For example, deductions available for the payment of insurance premiums, or long-term equity fund investments, could be reduced.

In addition, the government is reviewing the tax incentives currently provided by the Board of Investment of Thailand. It is thought that fewer corporate and import duty incentives could be the result, with benefits concentrated on investments that are considered a priority and beneficial to the country’s economic growth.

While it is not now expected that the new government will proceed with the previous government’s proposed introduction of an annual property tax, Thirachai intimated that there might be changes to the taxation of capital gains on equity investments through the stock exchange, while the introduction of a progressive annual excise duty on car ownership is also be looked at.

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