Sommai goes after more tax cheats

Sommai goes after more tax cheats

Finance Minister Sommai Phasee has instructed the Revenue Department to plug loopholes used to avoid paying taxes in a bid to boost the tax collection agency's revenue by at least 10%.

The minimum 10% increase does not include revenue from new or higher taxes stemming from an economic revival, he said.

The International Monetary Fund assessed Thailand's value-added tax (VAT) collection as 14% lower than it should be. However, that rate still compares favourably with euro-zone nations, which collect 17% less than they should.

Mr Sommai said Revenue Department officials should be more serious in demanding shops issue VAT invoices to purchasers every time, as some shops had sold unissued invoices to others wanting to inflate their expenses to understate tax payments.

Cracking down on tax avoidance is part of the government's policy of combating corruption and fraud as the ministry tries to add to government coffers with higher expenses from public investment imminent. The government plans to kick-start its 2-trillion-baht infrastructure projects this fiscal year to turn the country into an Asean logistics hub.

Mr Sommai said his ministry might consider tax incentives for small business owners entering the system, as a number of them have evaded tax payments because they felt a 20% corporate income tax rate was too high.

With government expenditure increasing, the budget deficit next fiscal year is predicted to reach 2.9% of GDP, Mr Sommai said, adding that a deficit of less than 3% was not alarming.

Revenue Department director-general Prasong Poontaneat said his agency planned to use a new IT system and recruit another 2,000 staff. The department now has 19,000 staff, down 4,000 from a decade ago despite an increased workload.

Mr Prasong said the department under his leadership had arrested seven suspects for filing false tax invoices in the past nine months, up significantly from two people over the past five years. Those found guilty of selling fake tax invoices are subject to a maximum of 20 years in prison and fines.

The department is amending the Revenue Code to authorise department officials freezing financial transactions of suspects to prevent them from hiding money.

Mr Prasong said his department signed a memorandum of understanding with the Federation of Thai Industries and the Thai Chamber of Commerce to abolish backdated tax probes in a bid to entice small and medium-sized enterprises (SMEs) to enter the tax system. Thailand's tax rates, particularly for SMEs, are fairly low among Asian countries. SMEs posting a net profit of less than 300,000 baht are not subject to tax, while for 300,000 to 2 million the rate is 15% and above 2 million is 20%.

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