The Revenue Department plans to provide more incentives for businesses and to improve tax collection efficiency in preparation for the Asean Economic Community in 2015.
“The AEC blueprint aims to achieve a single market and production base through the free flow of goods, services, investment, capital and skilled labour. The Revenue Department aims to facilitate these goals through the improvement of tax policies,” Nathanan Junprateepchai, professional legal officer at the department, said last week.
The department is preparing for the launch of the AEC next year by highlighting harmonisation and facilitation as keys for development, he told the India-Thai Chamber of Commerce.
For taxation under the AEC blueprint, the department has achieved the reduction of duties for six Asean countries to zero since 2010 and now aims to achieve the same for the CLMV (Cambodia, Laos, Myanmar and Vietnam) countries.
“By 2015, the 10 countries in the region will enjoy the benefit of moving goods and services freely among each other without taxes and customs,” he said.
There are two key parts of the AEC blueprint for taxation that aim to achieve harmonisation in tax collection. The first part is to enhance the withholding tax structure, where possible, to promote the broadening of the investor base in Asean debt issuance. The department has already aimed to reduce the withholding tax among the 10 countries by next year.
The second is for Asean countries to complete the network of bilateral agreements on avoidance among all countries. Thailand has signed a double tax agreement (DTA) with nine countries. The DTA agreement with Cambodia is expected to be completed by next year.
The department also aims to improve tax collection even further in order to achieve a common single market.
Last year, the department collected 69.5 per cent of the government’s income, equivalent to 14.3 per cent of gross domestic product, through various taxes.
The department wants to reduce the cost of tax collection to improve this figure in the near future. This year, the cost of collecting Bt100 in taxes is expected to fall to Bt0.475, a huge improvement from Bt0.616 in 2009.
The budget for tax collection this year is set at Bt8.98 billion to collect Bt1.89 trillion. The department was able to collect Bt1.76 trillion last year on a budget of Bt8.20 billion and at a cost of Bt0.465 for every Bt100 collected.
The department is trying to integrate mobile and social technology into tax collecting to improve efficiency, as more and more people are looking to pay their bills and taxes online. The process is ongoing.
Another tax policy in response to the AEC is the enhancement of Thailand’s competitiveness. What has already been done is the reduction of corporate and personal income taxes, double tax deduction for research and development, and encouraging maritime transportation through exemptions for the sale of ships, for international shipping business and for workers on Thai ships.
To encourage foreign investment in Thailand, the department has provided more incentives for regional operating headquarters, such as an exemption or reduction of 10 per cent for certain types of income and a rate reduction for expatriates to 15 per cent.
To promote international procurement centres, the department has introduced a reduction of 10 per cent for certain types of income and a reduction to 15 per cent for expats. The department also encourages the film industry by providing an exemption for foreign actors and actresses on income received from shooting in Thailand.
To help small and medium enterprises, the department has reduced the rate for SMEs by 15-20 per cent and aims to provide an exemption for community enterprises with assessable income not exceeding Bt1.8 million until December 31, 2016.
To support financial markets, the department has provided a dual listing rule that allows the same tax treatment between Thai securities and foreign securities listed on the Thai stock exchange.
To promote Asean Linkage, the department has provided an exemption for capital gains on foreign securities traded through the Asean trading link, a tax incentive for innovative financial instruments, and the removal of taxes from the transfer of assets relating to infrastructure funds.