Lower withholding tax, SME duties sought

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TAX REDUCTION
Lower withholding tax, SME duties sought
The Nation

BANGKOK: -- The withholding tax should be cut from 3 per cent to 2 per cent to boost liquidity for businesses and state enterprises as a measure to stimulate consumption, while certain import duties for small and medium-sized enterprises should be eased to raise their competitiveness, according to two government studies.

"Personal and corporate income-tax rates have been cut. And the withholding-tax rate, which has not yet been reduced, should be lowered in tandem.

"This is to lessen taxpayers' burden. When taxpayers have more money in their pockets, that will increase liquidity with more spending in the economic system," Krisda Chinavicha-rana, director-general of the Fiscal Policy Office, said yesterday.

The FPO is preparing a proposal for the finance minister to trim the withholding tax for both individuals and juristic persons, he said.

On average, the actual amount of the withholding tax for individuals is close to how much of it they deduct from their income tax. In fiscal 2013, the withholding tax for individuals accounted for 91 per cent, or Bt270 billion, of the Bt299 billion in total personal income tax collected.

The withholding tax for juristic persons was 24 per cent, or Bt143 billion, of the Bt592-billion corporate-income-tax total.

Over the past eight years, 90-91 per cent of withholding tax has on average been deducted from personal income tax, reflecting near equivalence between the deduction and the actual amount.

About 21-25 per cent of the actual tax burden for juristic persons was deducted, indicating a low actual withholding-tax rate.

The FPO is also studying a planned reduction of the customs duty on machinery and raw-material imports for middle- and lower-stream production.

That would bring down SMEs' production costs so that they could remain competitive.

Amid the unclear direction for the economic recovery, the FPO also plans to recommend to the Finance Ministry and the Cabinet to keep the value-added tax at 7 per cent for another year or two.

Finance Minister Sommai Phasee has said the national committee for tax reform was studying means to assist SMEs and enhance their competitiveness through tax breaks and an amnesty.

However, the measures will have conditions, particularly the requirement for only one accurate tax return. Many taxpayers keep two sets of books. The one not showing actual income is normally submitted for tax purposes.

Source: http://www.nationmultimedia.com/business/Lower-withholding-tax-SME-duties-sought-30256196.html


-- The Nation 2015-03-18

[Pib]

To offset that tax revenue loss be sure to raise property taxes.