Considering Taxation for Businesses with Lower Income
Hot Off The Press:
The Finance Minister, Pichai Chunhavajira, shockingly floated a novel idea yesterday, suggesting collecting Value-Added Tax (VAT) from businesses with an annual income as low as 1.8 million baht. This move aims to beef up state income and trim the budget deficits.
At present, businesses that pull in an annual income of that amount or more are compelled to pay VAT, in addition to other taxes. Pichai proposes the introduction of "VAT Category 2", similar to what some European countries employ. If businesses with an annual turnover of 1.5 million baht shell out a mere 1% VAT, it's estimated to yield an extra 200 billion baht!
Young guns in the entrepreneurial world tend to dance around the 1.8-million-baht threshold to sidestep VAT obligations, paying only personal income tax instead. These whippersnappers can write off 60% of their expenses, leaving a measly annual tax payment of just over 10,000 baht.
Pichai argues that broadening the VAT base would allow the government to slash the budget deficit from the current 4.4% to a leaner 3.5% of GDP. This boost in revenue could be channeled into investment projects.
Cutting expenses, especially the hefty paychecks of nearly three million civil servants, is reportedly difficult. Hence, alternative revenue streams are a must.
Right now, the government's tax revenue collection stands at a mere 15.5% of GDP, far below the peak level of 17%.
Regarding domestic purchasing power, Pichai suggests tackling the whopping 16.4 trillion baht household debt, with around 1.2 trillion in non-performing loans affecting roughly 5.4 million borrowers. The plan is to clear the debts of the 3 million borrowers owing less than 100,000 baht each in just three months. For those with more substantial debts, financial institutions will be encouraged to restructure the debt, while the ministry will offer soft loans to lend a helping hand.
Finally, Pichai set his sights on hiking the income of the country's 28 million farmers. How? By enhancing rice production efficiency and reducing cultivation areas by a significant 15 million rai, which would allegedly prop up market prices.
Businesses potentially needing to pay Value-Addled Tax (VAT) could expand from those with an annual income of 1.8 million baht or more, as the Finance Minister, Pichai Chunhavajira, envisioned introducing "VAT Category 2" to increase state revenue and reduce budget deficits. This tax reform aims to generate an estimated additional 200 billion baht annually.
