The Revenue Department says there are significant challenges this year achieving tax collection targets because of the slowdown in economic activities, although it has identified five sectors that show promise.
According to Kulaya Tantitemit, director-general of the department, for fiscal 2024 the department raised its revenue collection target to 2.27 trillion baht, up from 2.02 trillion in 2023, representing an increase of about 3%.
The increase is in line with projected Thai GDP expansion of 2.7% this year, according to an estimate by the National Economic and Social Development Council, while the Fiscal Policy Office predicted 2.8% growth.
"Achieving this year's tax collection target is considered challenging because of various factors, including external problems affecting the export market, elevated energy prices and interest rates, and government expenditure being delayed until April. Trade conflicts and barriers could also affect tax collection," she said.
"However, there is still confidence we will meet the tax collection target."
Tax collection for the first five months of this fiscal year (October 2023 to February 2024) amounted to 766 billion baht, 11.7 billion baht or 1.6% higher than the corresponding period of fiscal 2023.
The Revenue Department has raised its revenue collection target to 2.27 trillion baht for the 2024 fiscal year.
Declining profits
In terms of corporate income tax for fiscal 2024, the Revenue Department set a target of 811 billion baht, 5.7% higher than the target last year.
Of the 817 companies listed on the Stock Exchange of Thailand, their net profits decreased by 10.7% in 2023 compared with the previous year.
For non-listed corporations that submit figures to the Business Development Department and Revenue Department, usually by late May, their profit figures are expected to roughly align with the performance of listed companies, said Ms Kulaya.
PROJECTED WINNERS
The Revenue Department also monitors sectors that demonstrate growth potential and provides tax advice similar to preparations for an audit.
The following are sectors expected to expand based on data from 2023:
1. Energy-related businesses, benefiting from the increase in oil prices and higher sales volumes in the natural resources sector, while electricity generation has increased at power plants.
2. Medical and beauty businesses, driven by the growing elderly population, increasing tourism arrivals leading to higher demand for medical services, and a growing interest in cosmetics and personal care.
3. The operating results of retail and wholesale businesses stood out in 2023, as domestic consumption gained and government initiatives promoted spending, such as the Easy E-Receipt tax measure and longer opening hours for entertainment venues.
4. Tourism-related sectors continue to grow thanks to the government's support policies such as visa exemptions. The Tourism Authority of Thailand reported a 50% year-on-year increase in foreign arrivals to 6.38 million in the first two months this year.
5. E-commerce platforms, sellers, accommodation booking platforms, and influencers and YouTubers all indicate promising growth.
The department has a dedicated team to monitor and update its e-commerce regulations to suit the changing business landscape, such as requiring platforms to provide it with special account information.
TAX AVOIDANCE
Ms Kulaya said the department also has measures in place to prevent tax avoidance by large businesses that use transfer pricing.
Transfer pricing refers to an accounting practice that presents the price that one division within a company charges another division for goods and services provided.
This year, she said the department has a team in place to closely monitor transactions, especially international transactions, to prevent the inappropriate shifting of Thailand's tax base to other countries.
Though the economic recovery may be insubstantial, focusing on sectors that show good potential reveals many parts of the economy are still competitive and can adapt for growth, said Ms Kulaya.
Presenters promote the Revenue Department's e-tax system. Ms Kulaya says that the Revenue department has raised its revenue collection target to 2.2767 trillion baht for the fiscal year 2024. (Photo: Varuth Hirunyatheb)
GLOBAL MINIMUM LEVY
She said the department is also in the process of expanding the tax base to create revenue stability by drafting the "Top-up Tax Act (Pillar 2: Global Anti-Base Erosion Rules)".
Pillar 2 involves implementing a global minimum tax on large multinational corporations to reduce tax competition between countries.
The concept mandates corporations pay a minimum effective tax rate (ETR) of 15%. The Organisation for Economic Co-operation and Development (OECD) supports the concept to foster cooperation and halt the global race to lower corporate income tax rates, which has been ongoing for more than 40 years to attract investment.
This tax rate competition destabilises countries' tax bases, according to the OECD.
Regarding expanding the tax base to online businesses, Ms Kulaya said the department created the E-Business Monitoring Committee to track and propose policies and supervisory measures for both foreign and domestic platforms to ensure compliance.
For instance, Measure 17 requires platforms to submit special account information.
She said collaboration with platforms to educate business owners have started, while revisions to duties on imported goods valued at less than 1,500 baht ensure fairness for domestic operators. This measure was approved by the cabinet.
KNOWLEDGE EXCHANGE
On another front, the department participated in a project called Tax Inspectors Without Borders, which is a partnership between the UN and OECD aiming to exchange knowledge, support and enhance the auditing capabilities of Thai officials in overseeing digital businesses.
This project wants to make oversight more effective and recommend regulatory improvements to accommodate new businesses, said Ms Kulaya.
Tax authorities from more than 140 countries are negotiating an agreement to compel large digital companies such as Google, Facebook, Amazon and Apple to allocate a certain portion of their profits to pay tax in countries where these companies operate, including Thailand.
This initiative, known as Pillar 1, is in the process of finalising the details, with large countries considering the proposal. A conclusion is expected within this year, she said.
If an agreement is reached, the taxes collected from these digital businesses are expected to increase, said Ms Kulaya.
Pillar 1 addresses profit allocation and the right to tax multinational enterprises to ensure greater fairness.