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Government Announces that it Will Keep Income Tax Cuts in Place

Thailand’s Finance Ministry is hoping that the extension of the tax cuts will spur consumption and aid economic growth.

Thailand’s Finance Ministry is hoping that the extension of the tax cuts will spur consumption and aid economic growth.

 

BANGKOK – Foreign investors in Thailand can breathe a little easier; the country’s new government has announced that it will extend the lowered rates of corporate income tax (CIT) and personal income tax (PIT) through the 2015 tax year.

Thailand’s Finance Ministry is hoping that the extension of the tax cuts will spur consumption and aid economic growth.

Therefore, the tax rates in 2015 for the following types of companies will be as follows:

  • 20 percent CIT for companies with a net profit over THB1m (US$31,000), after being reduced for accounting periods in 2013 and 2014 from the previous 23 percent
  • 35 percent PIT (which is the highest PIT rate) for annual incomes over THB4m (US$124,000), having been cut from 37 percent for the 2013 and 2014 tax years by the previous government

The Thai government defines PIT as “a direct tax levied on income of a person. A person means an individual, an ordinary partnership, a non-juristic body of person and an undivided estate. In general, a person liable to PIT has to compute his tax liability, file tax return and pay tax, if any, accordingly on a calendar year basis.”

CIT is defined as “a direct tax levied on a juristic company or partnership carrying on business in Thailand or not carrying on business in Thailand but deriving certain types of income from Thailand.”

While the extension of the tax cuts is undoubtedly good news, investors should keep in mind that these governmental actions will result in a lowered level of government revenue.  Thus, it is highly likely that the government will seek to broaden the tax base in order to make up for the revenue lost by the tax cuts.  Measures currently being mulled over by the government include the implementation of an inheritance tax and a land and buildings tax.

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Posted by on Sep 26 2014. Filed under Economy & Business. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.
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