Companies applaud plan to cut corporate income tax

[Coss]

 

The private sector welcomed the Revenue Department’s plan to cut corporate income taxes, saying the lower taxes would increase Thai companies’ competitiveness and make the country more attractive to foreign companies.

 

Ninnart Chaithirapinyo, vice chairman of Toyota Motor Thailand, said the company wholeheartedly supported the proposal to cut corporate income tax from 30 per cent to 18 per cent.

 

Under the department’s plan, Thailand will be more competitive than Singapore, where corporate income tax is 17 per cent.

 

Ninnart said that if there were any changes to the BoI’s investment incentives, the government might give more time to the private sector. The BOI could shift its focus to improving the one-stop service as a facilitator of foreign investment.

 

“Don’t forget that Asean will be liberalised in 2015, according to the Asean Economic Community agreement. So I don’t think the tax reform will affect the country by attracting foreign investors,†he said.

 

Dusit Nontanakorn, chairman of the Board of Trade of Thailand and the Thai Chamber of Commerce, also supported the proposal.

 

“The tax structure must be modernised. The government has moved on to the right path. Cutting the tax will promote business growth and draw more foreign investment into the Kingdom,†he said.

 

He said that although the move might cut government revenue, it could seek other revenue channels such as revising the BoI, privileges, as some of them were out of date.

 

The Revenue Department this week said that it would propose a package of tax reforms to Finance Minister Korn Chatikavanij early next year.

 

The package includes the corporate-income-tax cut and an increase in value-added tax. There is an option to remove tax privileges granted by the BoI. Currently, the board provides a maximum eight-year corporate-income-tax holiday to companies granted the privileges.

 

Dusit said the BOI should promote investment in border provinces and overseas as a priority.

 

This would solve the labour shortage, as investors would be able to employ foreign workers. The tax restructuring should also encourage enterprises to adopt more automation and encourage Thai enterprises to invest in Asean nations.

 

Moreover, the government can increase taxes for high-income people, including heritage and landlord taxes, to compensate for lower revenue from corporate tax, Dusit said.

 

Meanwhile, Dusit said Thais should stop dividing into different T-shirt colours, as it has destroyed the country’s growth.

 

“Asean is moving forward to the single market. Thailand could be left behind if we still have internal conflict,†he said, adding that anyone who has created problems in society should back off, as such divisive behaviour had damaged the country for too long.

 

BoI secretary-general Atchaka Sibunruang was cool to the proposed revision in the privileges, but urged the government to weigh the pros and cons, as the BOI is in charge of drawing foreign direct investment.

 

She said the investment incentive was one of the important factors foreign investors would consider before deciding whether to invest in the country. The other factors are political and economic stability and sufficient skilled labour.

 

She acknowledged that Thailand’s current corporate-income-tax rate of 30 per cent was the highest among Asean countries.

 

Many foreign investors complain about this. The incentives the BOI gives to foreign investors remain competitive, although some countries have tried to offer better privileges to compete with Thailand. And this is the BoI’s concern if the government removes the tax exemptions.

 

“If the government removes the tax privileges, the BoI’s duty in the future will be to focus on promoting investment in Thailand only,†she said.

 

Chairman of Joint Foreign Chamber of Commerce, Nandor von der Luehe, said the corporate-income-tax cut would benefit the business sector but the option to remove tax privileges granted by the BOI needs the government to consider if Thailand could still attract foreign investment after the removal.

 

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[expat]

Gosh, I would have thought they would have objected to this.