Tax evasion feared in border towns
The Revenue Department has voiced concerns that the government's planned establishment of border trade towns could be used as a loophole for tax evasion, an informed source at the Finance Ministry says.
Those who want to exploit duty-free privileges to be offered in border trade town areas may cheat the taxman by including transactions in non-border trade towns and paying through the electronic channel in border trade town areas, the source said.
Apisak: Towns in provinces with SEZs
The smuggling of products from border trade towns to be sold outside the areas is another worry, the source said.
The border trade towns are aimed at boosting cross-border transactions.
At the moment, the markets in Cambodia, Laos, Myanmar and Vietnam have become large trading destinations for Thailand, accounting for 10.4% of the country's total exports -- comparable to big markets like China and the US.
Finance Minister Apisak Tantivorawong recently said the border locations would be established in provinces that have special economic zones (SEZs). The government planned to set up SEZs in 10 provinces: Tak, Sa Kaeo, Trat, Mukdahan, Songkhla, Chiang Rai, Kanchanaburi, Narathiwat, Nakhon Phanom and Nong Khai.
In a bid to prevent the smuggling of products from border trade towns to non-border trade towns, the Fiscal Policy Office (FPO) is conducting a study and seeking measures, including a limit on purchase quantities, value per person or the number of monthly visits to such areas.
Electronic payments will also be adopted as the sole payment channel in border trade towns to allow the tax-collecting agency to learn more about ongoing transactions.
The source said that the Revenue Department has already sent a letter to the FPO to show its concern about the tax loophole.
If only foreigners are allowed to purchase duty-free products in border trade towns, it will be able to close the loophole, but trade in the areas might not be so active, the source said.
The source floated the idea that the government might allow Thais to buy products in border trade towns for a certain period of time, such as the first three months after launch, to boost trading activities in the initial stage.