Deloitte (Thailand) suggests that the country focus on infrastructure development and political stability to attract more foreign direct investment (FDI) rather than concentrating too much on lowering taxes, as this is only one of the factors investors co
Anthony Visate Loh, country tax and legal leader for Thailand and Myanmar at the firm, said foreign investors were highly concerned about political stability, infrastructure, and such necessities as logistical facilities, as well as an adequate supply of qualified labour, not just the taxation rate.
“Nowadays, Asean countries have tried to cut their own incomes by reducing taxes to draw more foreign investment [ahead of] full Asean integration. However, tax is not the first [thing] foreign investors consider. Thailand should not fall into this trap to cut our national income, but should focus on development,” the legal expert said.
To ensure sustainable development and continue to attract FDI after Asean liberalisation, Loh said the development of infrastructure needed to be the first priority. Thailand can offer other strengths besides low taxes.
Thailand’s corporate income tax is currently 20 per cent, including 8-per-cent withholding tax. Singapore’s rate is 17 per cent, Malaysia, Indonesia and Myanmar take 25 per cent, and Vietnam 22 per cent.
Loh noted that Thailand had a major geographic advantage making it capable of being a logistical hub. With well-established infrastructure, this advantage was something that would appeal to potential foreign investors for the long haul, while cutting taxes would be only a short-term incentive.
He said the cost of doing business was another major concern for investors. The government should develop human resources and support the supply of skilled labour.
Meanwhile, as a legal expert on Myanmar, Loh suggested that Thai investors carefully consider business laws and regulations before launching ventures there. Before investing in Myanmar, they should consult legal experts, as some laws have been in force for many years but are not up to date. The interpretation of laws and regulations could vary, so Thais should be careful to be in compliance.