The Revenue Department is considering tax incentives to encourage owner-operators to register as juristic persons and pay the right amount of tax.
Director-general Prasong Poontaneat has assured owner-operators who transform into juristic persons that they will not receive an additional tax burden.
They will know within a month what the tax incentives are, said Finance Minister Apisak Tantivorawong.
Many owner-operated small businesses have sprung up in Thailand, he said. This is one reason behind skyrocketing household debt as these operators have borrowed individually to fund their businesses, he said.
A Revenue Department source said running a business as a juristic person would give owner-operators better benefits.
For example, responsibilities when companies file for bankruptcy are more limited, juristic persons are given higher credit as they must have registered capital and exact operating locations, and selling a business or seeking new partners can be done more easily.
Convincing people to operate as juristic persons and reducing the informal business sector can make economic analysis more precise. It will also boost the government's tax revenue as they are required to record earnings and pay tax following implementation of the national e-payment system.
The source said 7,000 goldsmith shops were run by owner-operators but many understated gold sales volume.
According to authorities' trade data, Thailand imports gold worth about 500 billion baht a year, with gold worth 200 billion for re-export and the remainder for domestic consumption. However, reports by goldsmith shops stated that gold for domestic consumption amounted to only 20 billion baht.
The government is stemming loopholes and convincing operators to pay the correct taxes. It recently launched a single financial account scheme for small and medium-sized enterprises (SMEs).
Under the scheme, registered SMEs with annual sales of up to 500 million baht are exempt from backdated tax scrutiny. Those with registered capital not exceeding 5 million baht and revenue not exceeding 30 million baht for the 2015 accounting year have no tax burden for the 2016 accounting year.
A 10% corporate tax will be imposed on those with net profits exceeding 300,000 baht for the 2017 accounting year, and a tax exemption will be allowed for net profits of up to 150,000 baht.
SMEs will resume paying normal tax rates from 2018. They are now exempt from corporate tax for net profits of up to 300,000 baht but pay 15% tax for net profits of 300,001 to 3 million baht and 20% for net profits of more than 3 million.