New govt may follow on with corporate cut

Following a policy initiative of the Pheu Thai-led administration, the incoming Democrat-led government is talking about a cut in corporate income tax to 25 per cent from the current 30 per cent.

UOB Kay Hian this week said the tax cut would cost Bt40 billion in lost revenues per year. To ease the impact on the budget, the ministry plans to propose raising taxes on fuel by Bt1 per litre and on beer to 57 per cent from the current 55 per cent.

"The reduction would narrow the discrepancy in tax rates between listed and non-listed companies," it said.

Companies listed on the Stock Exchange of Thailand currently pay 25-per-cent corporate tax on profits of up to Bt300 million per year, with any profits above this bracket taxed at the normal 30 per cent.

If the new government approves a 25-per-cent rate, it would apply to all companies - with no limit on profits.

Thailand's corporate-tax rate is one of the highest in the region.

Corporations have been seeking a reduction over the last 10 years, but past administrations have been reluctant to agree as it would hit government revenue.

"We believe the current global crisis, aggravated by domestic political problems, and particularly the closure of airports, has prompted the [proposed] cut in corporate income tax," said the securities house.