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WICHIT CHANTANUSORNSIRI
Corporate income taxes will be cut to 25% from 30% to help support industrial competitiveness and ease pressure on businesses suffering during the current crisis, according to Finance Minister Suchart Thada-Thamrongvech.
He said the tax cut, which could be approved as early as today, would cost the country around 40 billion baht in lost tax revenues per year.
But slowing economic growth and the current crisis heightened the need for added fiscal measures.
Dr Suchart said economic growth in 2009 could fall to between zero and 2% as the political crisis hammers the country's tourism sector. The Finance Ministry had previously projected growth in 2009 at 3% to 4%.
To ease the impact of the tax cuts on the budget, the ministry plans to propose raising taxes on fuel by one baht per litre and on beer to 57% from 55%.
The cabinet will also consider extending tax benefits for the property sector by another year. The measures, which include a reduction in the specific business tax to 0.1% from 3% and reductions in transfer and mortgage fees, are due to expire in January.
Dr Suchart said the reduction would help close the discrepancy in tax rates between listed and non-listed companies.
Currently companies listed on the Stock Exchange of Thailand can receive a 25% corporate tax rate on profits of up to 300 million baht per year, with any profits above 300 million taxed at the normal 30% rate.
Dr Suchart said if the cabinet approved the new 25% rate, it would apply to all companies with no limit on profits.
"We hope the tax rate will help local companies better compete with others in the region, where many countries offer lower tax rates than we do," he said. "And of course, we hope that the lower rate will help ease pressure on companies to lay off staff during the current economic slowdown."
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