According to a statement by the director general of the Revenue Department of Thailand Satit Rungkasiri July 25, the Department is ready to implement a cut in the tax on corporate income tax in the country, as proposed by the newly elected Pheu Thai Party. Although the Treasury Department also recommends that an increase in national value added tax (VAT) was introduced in order to offset revenue losses.
On July 3 Pheu Thai Party of Thailand won the country’s general elections, gaining 265 of the 500 seats in the House of Representatives. The party campaigned on a promise to drastically reduce the national rate of corporate tax if elected.
In line with the promises of the ruling party Rungkasiri Satit said the Department of Revenue is immediately ready to cut corporation tax from the current 30 percent to 23 percent. Preparations are underway to carry out long-term plan to reduce the rate of an additional 3 percent when economic conditions permit.
Estimates of revenue department, the rate cut will result in lost tax revenues of approximately THB 150 million (USD 5.04 billion), although the move would improve the national economy and significantly increase levels of foreign direct investment in Thailand. Satit Rungkasiri recommended that the government should also consider increasing the current VAT rate of 7 percent as the economy expands. He added that since many consumers need are already exempt from VAT, a tax increase would have a negative effect on low-income income taxpayers.
Together with impending tax changes, the Revenue Department is also planning to increase tax efficiency and compliance with national tax collections, by creating new infrastructure of information between the Bank of Thailand and the Ministry of Commerce. Once the project is completed the Treasury Department will be notified in real time on business operations conducted in the country.