The Finance Ministry is set to cut the corporate income tax rate for small and medium business operators (SMEs) from 15% to 10%, for SMEs that improve their accounting procedures.
Permanent secretary for finance Rungson Sriworasat said the proposal will be forwarded to the cabinet for consideration at its meeting tomorrow.
Under the new tax rate, SMEs earning a net profit of 300,000 baht or less will not pay tax. Those earning between 300,000 baht and 3 million baht will pay just 10% tax.
Under the ministry's definition, SMEs refer to companies with a paid-up capital of five million baht or less, and annual sales revenue of 30 million baht or less. Business operators with annual sales revenue of more than 30 million baht are considered large corporates, subject to a 20% tax rate.
Thailand has 2.7 million SMEs, 80% of which have never paid corporate income tax. Most tend to have two accounts, one being the actual one for internal use, and another with false documentation to be submitted to the state.
Once the new tax measure is approved, Mr Rungson said, only SMEs that keep a single account will be eligible for the lower tax rate. "This is a good opportunity for the government to help SMEs which have been the hardest hit in the current economic situation, and at the same time encourage them to enter the formal tax system," he said.
The Revenue Department will help SMEs formulate their accounts and help them work with the Bank of Thailand and other bodies that can audit them for loans. Mr Rungson estimated the new SME tax rate would cut the Finance Ministry's annual tax revenue from SMEs by five billion baht from its average of 30 billion baht.
The ministry did not agree with a proposed SME tax amnesty, as this would not bring them into the tax system, he said.