Corporate tax cut to help Thailand SMEs

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Corporate tax cut to help Thailand SMEs 
The Nation: 30 Jul 2010
Corporate tax cut to help SMEs
By SIRIPORN CHANJINDAMADEE
THE NATION
Published on July 30, 2010

A cut in the corporate income tax to 25 per cent for listed companies will be proposed to the Finance Ministry as an incentive for SMEs to raise funds from the public.

"This process is expected to be completed within a few months," Vitthaya Inala, vice chairman of the Senate committee on economics, commerce and industry, said yesterday.

The reduction in the current 30-per-cent tax rate to 25 per cent would be extended to companies listed on either the Stock Exchange of Thailand (SET) or the MAI, he told a seminar on SMEs' alternatives for capital accessibility.

The 25-per-cent tax break expired last year and the companies listed on the two boards now have to pay the same rate of 30 per cent as non-listed companies, he said.

Listed companies in Thailand face a higher tax burden than those in regional countries such as Vietnam with 25-26 per cent, Singapore with 18 per cent and Malaysia, 25 per cent.

The committee would also consider loosening some rules and regulations of the Securities Act to give SMEs a chance to seek a listing.

Now the law requires companies to show long track records before going public. This has proved to be a hurdle for SMEs.

Some SMEs with innovative products might have long-term business potential, so the rules and regulations should be made flexible and favour SMEs to mobilise funds from the public.

SMEs have abundantly demonstrated their performance and business capabilities, as seen during the post-1997 financial crisis, when they could make a greater revenue contribution to the government than large companies.

"We realise that we have to strengthen SMEs so they can raise funds from the MAI. This will help reduce the cost of capital for SMEs and then increase their competitiveness," he said.

The MAI lists 63 companies with market capitalisation of Bt46 billion and combined sales of some Bt50 billion last year. They make up a minute portion of the more than 200,000 SMEs across the nation.

If the SMEs can access sources of funds freely and have alternatives to raise capital, this would make them stronger, he added.

Chaitr Charnchainarong, head of issuers and listing at the SET, said he hopes that if the government reduces corporate taxes for listed companies, that would support SMEs in listing more on the MAI.

He said the policy that allows companies awarded Board of Investment privileges to list on the bourses would also enhance the mobilisation of funds from the public via the capital market.