Thai Revenue Department requests 1-year extension of 7% VAT rate

[webfact]

VAT
Revenue Department requests 1-year extension of 7% VAT rate
The Nation

BANGKOK: -- The Revenue Department has proposed that the Finance Ministry leave the value-added-tax (VAT) rate unchanged at 7 per cent for one more year as a way to stimulate domestic consumption.

Meanwhile, the tax-revenue target for the 2016 fiscal year has been set at about Bt1.8 trillion after 2015 revenue is expected to be Bt160 billion below target.

Prasong Poontaneat, director-general of the department, said it would propose an extension of the current VAT rate for one more year after its expiration on September 30, given the current economic situation. The extension would be aimed at promoting domestic consumption. According to the relevant tax law, the VAT rate should be 10 per cent.

When the time is right, however, the VAT rate will probably go up. Prasong said every 1-percentage-point rise in the rate should boost tax revenue by Bt150 billion. He also pointed out that Thailand's VAT rate is not high compared with regional peers.

The decision for a VAT increase will likely depend on the political situation and the economy.

In the first eight months of the 2015 fiscal year, from October 2014 to May 2015, the Revenue Department collected a total of Bt1.02 trillion, about Bt114 billion or 10.1 per cent lower than its target and 4.5 per cent less than in the same period of last year.

"In May alone, tax revenue was Bt70 billion below target as petrochemical businesses and others paid their taxes in early June, instead of late May. In June, tax revenue is expected to be above target by tens of billions. In the first nine months [of this fiscal year], tax revenue is expected to be Bt80 billion below target," Prasong said.

In the first eight months, collection of corporate income tax was Bt46 billion below target, while VAT fell Bt34 billion short.

The lower-than-expected VAT revenue resulted from lower import values, which were below target by Bt37.7 billion, partly as a result of recent drops in crude-oil prices. VAT on domestic consumption was higher than expected by Bt2.9 billion.

Tax revenue from petroleum businesses was lower than projected, reflecting impacts on exploration companies from recent declines in crude-oil prices.

Prasong said the Revenue Department expected to miss its overall target of Bt1.965 trillion by no more than Bt160 billion in fiscal 2015. As a result, the department's target for fiscal 2016 has been lowered to Bt1.895 trillion to reflect the real situation.

On the matter of 14 civil servants suspected of VAT fraud, Prasong said an investigation would be concluded before the end of this month, and appropriate disciplinary steps taken. After that, a committee will be established to investigate two more cases of suspected VAT fraud.

Source: http://www.nationmultimedia.com/business/Revenue-Department-requests-1-year-extension-of-7--30262451.html


-- The Nation 2015-06-17

[webfact]

7% VAT to be extended another year



BANGKOK: -- The 7% value-added tax (VAT) will be extended for another year after it expires end of September if it is approved by the Finance Ministry.

Revenue department’s director- general Prasong Poontaneat said he would propose an extension of the current VAT rate for one more year to the ministry after its expiration on September 30.

He cited the current economic situation to seek the extension.

According to the relevant tax law, the VAT rate should be 10 per cent but past governments had extended its enforcement until today.

The Revenue Department chief said any one percentage point increase in VAT will generate an increase of 150 billion baht revenue to the state coffer.

He said the department has collected 1.02 trillion baht baht revenue during the past eight months from October last year to May this year, representing a 10.1% or 114 billion baht below target, or 4.5% lower than thgebsame period last year.

He said the department has set revenue projection for the whole fiscal year at 1.965 trillion baht but now has adjusted the projection down to 1.895 trillion baht to reflect the true economic situation.

(Photo : Thai PBS File)

Source: http://englishnews.thaipbs.or.th/7-vat-to-be-extended-another-year


-- Thai PBS 2015-06-17

[Srikcir]

The issue from a treasury perspective is not so much whether the VAT rate is raised, lowered, or kept unchanged.

Thailand's tax collection "stands at 18 per cent of GDP, a lowest rate in the world. In developed economies, tax collection is about 40 per cent of GDP."

The Prayut regime NEEDS fiscal measures to remedy a collapsing economy and just settling on the status quo won't improve the economy. Because the treasury is thread bare of capital, the government must borrow substantial funds from foreign nations to build the infrastructure necessary to SUSTAIN the economy. But sustaining an economy through foreign debt will not IMPROVE the economy.

The Junta's failed economic policies will not only drastically hinder economic progress during the Junta's remaining time as the nation's government but also adversely affect economic recovery by subsequent new governments.

Welcome to the Junta's Reform of the Economy.

[aslimversgwm]

horns of a dilemma, or is it 'Catch 22': can't raise VAT because economy is too weak; economy too weak because insufficient tax revenues. I know: how about a wealth tax on those top 5% who own 95% of the country's wealth? What am I saying! Smack my bottom!

[billd766]

As a former UK Chancellor of the Exchequer (Denis Healey) once said.

"Tax the rich until their pips squeak".

[khunpa]

The Revenue Departments and Financial Ministry should ask themselves WHY, they are not able too collect and reach their VAT-payment targets? The answer is simply, because the officials pocket most of the money themselves.

From doing business before in Thailand, we only learnt the following from the Revenue Department officials:

• Thai-companies having Farang employees are not welcome in Thailand, although we could not find qualified Thai staff for the positions.
• Revenue Department Officials do not care about a business or its impact on the local community. They only care about how much money they can pocket for themselves. It is about pure personal greed and corruption - nothing else.
• If you do things the correct way, you will be punished for it. Because the Officials will expect you to cheat, due to their own corrupt and sick mindset. Add to the a very low level of competence and you got a business environment that is simply too dangerous to work and navigate in. Many Revenue Department officials, do not even know the Tax/VAT law. So you need to hire a competent person to simply educate them about the law, which they should be the experts in. But if all is about corruption and bending the rules, then how can you ever learn the correct thing and the actual law?

We later moved our company to more foreign-business friendly country, where we could also find qualified lawyers and accoutants.

When the officials came to collect last time, the simple answer was that the company had moved out of Thailand, because of corruption and constant harassment. They still had no clue or could understand why.

Thailand is a no good country to make business, especially if you are involved as a Farang. Instead of worrying about lost collections and missing targets, they should worry about their officials harassing decent companies only with the purpose of personal gain. And because of this, the countries economy will only become weaker and weaker. I know lost of good business men and companies, that have moved out of Thailand, because they simply are feed up with wasting their time on corrupt officials.

Edited June 17, 2015 by khunpa