Lawmakers have taken the first step to plug a loophole in existing tax laws which allows high-income earners to set up "groups of persons" so they can pay less income tax.
The National Legislative Assembly on Friday accepted in principle an amendment bill to the Tax Code on its first reading. It also assigned its economic, finance and fiscal committee to scrutinise the details.
The bill in essence scraps an exception that allows a taxpayer to not include his share of profits in a partnership or a non-juristic group in his personal income tax filing.
Finance Minister Sommai Phasee said that since personal income tax uses progressive rates, many planned their taxes by setting up partnerships or "groups of persons" to spread their income", thus moving into a lower tax bracket and ultimately paying less tax.
"The bill solves the problem by requiring partnerships and groups of persons to pay their dues," he said.
"Professionals with high incomes such as actors or independent specialists know the trick and set up groups of persons so they end up paying 10-15% in tax from the 20-30% they are supposed to pay," Mr Sommai said.
Based on the ministry's estimates, if the bill comes into effect on Jan 1, 2015, tax collection will increase by 9 billion baht for the 2015 tax year ending next December.