Thailand’s e-tax (electronic tax) and single financial account scheme is projected to boost VAT (value-added tax) by 100 billion baht per year, according to the Revenue Department.
Once the new scheme is enforced, VAT from domestic services and purchase is expected to rise by at least 30%, says Prasong Poontaneat, the department’s director-general. In fiscal 2015, the department generated 708 billion baht in VAT revenue. Domestic consumption accounted for about 350 billion baht of that revenue.
New tax incentives have been put in place to encourage SMEs (small and medium-sized enterprises) to join the single financial account scheme. While these incentives will cost the government 20 billion baht in revenue, Mr. Prasong says the Revenue Department will see gains from VAT once these businesses join the formal tax system.
The financial account scheme requires SME operators to register with the department.
Firms with maximum annual sales of 500 million baht will be exempt from backdated tax penalties. Registered SMEs with capital under 5 million baht and revenue of 30 million baht or less for the 2015 tax year will be exempt from paying taxes in 2016. Corporate tax for eligible firms will be reduced to 10% in 2017. Firms will pay normal tax rates from 2018 onward.
Mr. Prasong noted that the Revenue Department may leave the current 7% VAT rate intact if more revenue is generated from the new tax scheme.
The deadline for registration is today. As of Monday, 430,000 SMEs, the majority of firms eligible for the scheme, had registered with the Revenue Department.