Private input needed for 'last tax reform'

[webfact]

Private input needed for 'last tax reform'
Achara Deboonme
The Nation


Kitipong

BANGKOK: -- Wooing business' opinions on how the legal landscape should be changed, Kitipong Urapeepatanapong, chairman of Baker & McKenzie's Bangkok office, reckons that this is the last chance that any major legal obstacles can be tackled.

He is seeking an overhaul of the Revenue Code, enacted in 1939 and still enforced with small adjustments in the subsequent 76 years.

"It's clear that the constitution is blocking any political party from winning a majority vote. In this scenario, you can rest assured that no future government will have the mandate to amend the law," said the lawyer, who is one of the 250 members of the National Reform Council, which will soon vote on the junta-sponsored draft charter.

The law firm, an arm of the world's biggest by revenue, on Monday gave a briefing to its clients on some key laws that will shape the business environment.

One of them concerns loan collateral, which could affect project financing. The law extends the types of assets that can be used as collateral to include raw materials and other inventory. In the planning for two decades, the bill passed the first reading despite flaws, said Sawanee Sethsathira, a partner of the law firm.

The key flaws are the immense power of receivers and the new requirement for the registration of all assets with the understaffed Commerce Ministry. Importantly, foreign banks lending to a project in Thailand without having a presence in the country would not be covered by the law, raising concerns that this would drive away much-needed external funding.

"The law is aimed at extending financial help to SMEs (small and medium-sized enterprises). But the enactment without taking into consideration stakeholders' opinions would only lead to more problems," Kitipong said.

"True, reforms need legal support, but the government sector is not in a position to support this change."

The law promising tax incentives for international headquarters will also change the business landscape. Kitipong admitted that the incentives might be insufficient to draw Western companies without an election, but they should be enough to attract Japanese companies.

Thai companies building a presence overseas could also benefit from the law through tax waivers and a hefty cut in the corporate income tax rate.

Of all the pending legal changes, he believes that the long-overdue amendments to the Revenue Code are the most urgent. Once the tax base is broadened, a more transparent and fairer tax system would eventually boost national tax revenue. With a system to scrutinise and properly tax one's assets, this would also increase taxpayers' accountability, he said.

Kitipong is one of the 15 members on the tax reform committee set up in February by the Finance Ministry. He said the committee has approved in principle his proposal to issue e-cards to all taxpayers that would store information on their income and assets.

He also proposed handing Bt10,000 to all people who have so far avoided filing tax returns. The amount will be strictly used to deduct their taxes due. Of all 35 million workers in the country, fewer than 10 million actually paid tax in 2013 and only 24,709 taxpayers were subjected to the maximum income tax rate.

The committee also discussed the possibility of slashing the maximum personal income tax rate from 35 per cent to 28 per cent, in line with the cut in the corporate income tax rate from 30 per cent to 20 per cent.

Some tax privileges offered by |the Board of Investment would also be eliminated, while the tax law might be amended to facilitate mergers and acquisitions and promote investment in the stock market.

The tax reforms have Singapore as their model, thanks to the clarity and proven records.

The draft amendments would hopefully be ready in November.

"The goal is to broaden the tax base and lower taxes. Government revenue will rise while we are introducing a culture of taxpaying as the duty of all Thais," he concluded.

Source: http://www.nationmultimedia.com/business/Private-input-needed-for-last-tax-reform-30258944.html


-- The Nation 2015-04-29

[Srikcir]

He is seeking an overhaul of the Revenue Code

What's the point when the Thai government, including Prayut's regime, is incapable of adequate tax collection and enforcement. Thailand has the lowest level of taxation to GDP rate in the world.