1. Trim Personal income taxes from 5% - 37% to 5% - 33%.
2. Trim Corporate income tax from 30% to 27%.
3. Raise Value Added Tax (VAT) from 7% to 8%.
For several years, Thais' have been charged at a maximum rate of 37 percent income tax which is far more than neighbouring countries such as Hong Kong, which charges a maximum rate of 15 percent, while Singapore charges a maximum rate of 30 percent. The Revenue Department now considers it time to restructure taxes as the state has enjoyed a budget surplus for seven consecutive years and officials have pointed out that lower tax rates may mean higher tax collection as tax evaders may begin paying their taxes again.
The Revenue Department further explained that the proposed cuts in personal and corporate income tax over the next five years are not expected to effect the state's overall earnings as, although reducing the personal income tax rate by one percent would result in a decline in annual revenue of eight billion baht, raising VAT from 7% to 8% would increase the Governments revenue by 30 - 36 billion Baht. In the short term, therefore, state income would remain unaffected, and in the longer term, the Government would obtain additional income. The department further estimates that earnings will grow by an average of 15% per annum over the next four years.
Under the Master Plan, the Government will also forego some major sources of income by allowing deductions for expenses such as life insurance and housing loans, cutting income tax for the disabled, alleviating the tax burden on senior citizens, and waiving taxes on housing cooperatives for low income groups.
The government hopes that the new tax plan will enhance Thailand's ability to compete in international markets and attract more investment to Thailand.
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