Thailand Raises Income Tax Exemption Level

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

04 December 2002

Despite pressure from the International Monetary Fund and ratings agencies on the Thai government to cut back its budget deficit and rein in the growth in state debt, the cabinet yesterday decided to raise the annual personal allowance against income tax from Baht50,000 to Baht80,000 (US$1,800).

The government says that lost tax revenues, estimated to be least Bt4bn ($920m), will be more than compensated by more efficient tax collection from a smaller group of people. Attempting to stimulate the economy, which is estimated to grow this year by about 4.5%, the government has also extended a package of tax incentives aimed at the property sector.

The government has been quite active in using fiscal means to encourage investment in the economy. Last July it approved a five-year plan to encourage venture capital funds to invest in new businesses, waiving corporate tax and import duty on machinery and establishing an institute to assist new companies. And last December the country inaugurated a 'headquarters' regime for service companies, offering a reduction in corporate tax from 30% to 10%, and in personal taxation from 37% to 15%. In January, the Government announced an income tax cut to 10% for foreign actors in order to encourage overseas movie makers to produce more films in the country.

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