Revenue Department to Slash Corporate Tax

The Revenue Department is considering cutting corporate income tax to eighteen per cent in order to meet the challenge posed by Thailand's upcoming membership of the Asean Economic Community (AEC).

Deputy Director General Anant Sirisaengtaksin said the department was preparing to restructure taxes in part to boost the country's competitiveness when the ten members of the Association of Southeast Asian Nations implement the AEC in 2015.

The AEC will allow free movement of goods, investment and labour among member countries without taxes or other barriers.

Anant said Thailand's geographic location gave it an advantage and if the country's tax system were more favourable for business and investment it would further increase the country's competitiveness.

He said the department was ready to cut corporate income tax from thirty per cent to eighteen per cent, the same as Singapore.

The lower rate will draw more investment and boost consumption, he said. He is also optimistic that the tax cut will lead to an expansion of the tax base, increasing government revenue.

However, the corporate tax cut will be accompanied by an increase in value added tax from seven per cent to ten per cent. The VAT rate is the lowest rate in the world now and many countries have higher rates, he said.

The Board of Investment's tax privileges will also be removed, with every firm subject to the lower tax rate of eighteen per cent, he said.

However, another source said there would be no changes to tax this year as there would be early elections and politicians would not want to upset voters by increasing some tax rates.

Source - The Nation