Thailand looks to close tax loopholes

[Admin]

Thailand looks to close tax loopholes 
Bangkok Post: 7 Jan 2011
TAXATION
Reform must cover whole system, says revenue chief

Reform of the tax structure is essential to increase collection effectiveness and close loopholes that have led to evasion, says Sathit Rungkasiri the director-general of the Revenue Department.

For reform to be meaningful, he said, authorities need to look at the whole tax system rather than adjusting only one or two parts.

"For instance, we can't increase value-added tax VAT while not considering reducing other taxes. That's because taxpayers aren't going to be happy. No government would dare to increase one item while not intending to reduce another," said Mr Sathit.

Whether reform could be achieved would largely depend on how long the current government intends to stay in office. An election is widely expected to be called in the first half of this year.

While closing loopholes is a major mission, Mr Sathit says the tax structure also needs to be in line with new products and services coming into the market.

For instance, the department needs to look into transfer pricing, involving the way multinational companies report costs and profits among entities in various countries, which has caused the department to lose tax money.

The department is also looking at a thin capitalisation law, which other countries use to regulate operators who avoid paying tax by claiming their businesses have very low registered capital and operate at a loss.

"Those companies tend to be responsible for the debts equal to their registered capital and then close themselves down. Yet they reopen their businesses again for a short while," Mr Sathit explained.

Approximately 40% of businesses claimed they operated in loss yet they still credited their taxes and were still able to stay in business.

"It is quite obvious that there might be some kind of intention to avoid paying tax. For instance, the business operators might add their personal expenditures into their business expenditures to make the books appear to contain more expenses than income. Or they might purchase very high-priced cars and record it as a company expenditures. The department has tried to look into this more closely now," he added.

The department is also taking a closer look at proposals to increase transactions that can be tax-deductible. Currently more than 20 items can be tax-deductible, be it an investment in long-term equity fund and retirement mutual fund, insurance premiums and the like.

Last year officials floated proposals to reform corporate and personal income tax and VAT to improve the competitiveness of businesses and make the system fairer. Mr Sathit proposed cutting the corporate tax rate to 18% from 30% now, and capping personal income tax rates at 25%, instead of the current progressive rates of 5-37%.

http://www.bangkokpost.com/business/economics/214844/reform-must-cover-whole-system-says-revenue-chief

[nookiebear]

Tax in Thailand!!!!!!!!!!!!!!!!

[boloa]

About 5 years ago my wife started a small shop in the village.She went to the local Amphur to get the licences , about 100-150 each, one for selling cigarettes and on for alcohol (I think ). After a while the local tax officer came round and asked my wife how much money she made." Nit Noy " she said,"OK " said the tax officer " 300 baht a year".They didn't look at her books or anything !!!

Maybe things have changed