The Fiscal Policy Office (FPO) is considering raising the maximum earnings that are eligible for personal income tax exemption as part of a structural reform to be fairer and ease the burden of low-income earners.
A person earning up to 20,000 baht a month is currently exempted from paying income tax.
The new structure may increase the amount to 23,000 baht.
FPO director-general Krisada Chinavicharana said the move was due mainly to daily living costs rising faster than the pace of monthly income.
The change in maximum income for tax exemption will make the tax structure fairer for the low-income group, he said.
He said the daily expenses of people were higher than in the past.
"We have to calculate the level of monthly income that can put food on the table but is still too low to bear a tax burden. We have to extend the tax exemption to cover this group as well," said Mr Krisada.
For instance, if the annual expenses of each income earner are revised up to 100,000 baht, the maximum monthly income that should get tax exemption could rise to 23,000 baht.
"We have not finalised the figure yet," said Mr Krisada
The top personal income taxable rate of 35% will also be cut to make it competitive compared with other countries in the region.
"I can't tell you what the final decision will be, but we will have to take countries such as Malaysia, whose highest tax rate is 25%, and Singapore, whose highest rate is 20%, into consideration. These rates will be used as a factor to consider the suitable rate for Thailand," said Mr Krisada.
The new top rate has to be adjusted in order to improve Thailand's competitiveness and to serve the government's aim to use tax policy to attract multinational companies to set up their regional headquarters here as well as to boost foreign direct investment.
"The high personal income tax rate is one of the major obstacles for some foreign companies, as they have a problem in recruiting foreign workers to work here because these people can pay lower rates in other countries," said Mr Krisada.
Personal income tax is only one of the taxes facing reform by the Finance Ministry with the aim of increasing fairness in society and also plugging loopholes that allow tax avoidance.
The whole tax reform plan will be completed in December before the finance minister schedules submission of the plan to the cabinet.
Although corporate income tax is levied at 20%, small and medium-sized enterprises (SMEs) pay only 10%. With the top personal income tax rate at 35%, many people set up an SME company in order to pay the lower tax rate.
According to the Revenue Department's data for 2014, there were 10.49 million tax filings and 6.53 million were eligible for tax exemption because they involved earnings of less than 150,000 baht per year.
Only 34.65% of people filing tax returns were required to pay tax.
The largest taxpayer group or 1.63 million people was those earning 150,001 to 300,000 baht per year.
The smallest number of taxpayers or 24,700 people declared their personal income at more than 4 million baht a year.
As for corporate income taxable in 2014, there were 500,000 companies declaring tax payments, with 310,000 or 62.1% required to pay tax.