Thailand To Impose New Taxes By 2006

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

24 August 2001

In a bid to expand the tax base and stabilise the budget, Thailand's Deputy Finance Minister, Suchart Jaovisidha, has confirmed this week that government will impose new property and inheritance taxes within the next five years.

The Minister's announcement follows calls from the International Monetary Fund (IMF) to bring forward the Thai government's plans to raise VAT from 7 per cent to 10 per cent. Initially the increase was put on hold until October of next year from which time the government would raise the tax by one per cent every year until it reaches the 10 per cent ceiling. However, the government is resisting this recommendation because it believes it is too early to impose the higher tax given the current inertia of the country's economy.

Thailand's tax revenue is around 16 per cent of GDP which is extremely low when compared to other countries on similar economic development levels.

Suchart told local reporters that the five-year plan is expected to expand the tax base by 10 per cent annually, and will enable the government to balance the fiscal budget by 2006. He also has plans to improve the tax collection process; slack legislation has seen many taxpayers take advantage of legal loopholes allowing tax evasion in Thailand to become rife which is compounded by cronyism within the political and business arenas.

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