The cabinet on Monday approved tax incentives to boost domestic consumption in a bid to revive an economy struggling from the impact of the coronavirus pandemic, Prime Minister Prayut Chan-ocha said.
The government will offer a tax deduction of up to 30,000 baht on purchases of goods and services from October to December, which is expected to inject 120 billion baht into the economy, he told reporters.
The cabinet is reported to have approved the proposal by the Centre for Economic Situation Administration on Wednesday to offer taxpayers income tax deductions of up to 30,000 baht for purchasing products and services with a 7% value-added tax (VAT).
Effective from Oct 23 until Dec 31, the tax deduction offer would apply to the 2020 tax year and was projected to inject about 120 billion baht into the country's economy, according to Danucha Pichayanan, deputy secretary-general of the National Economic and Social Development Council.
About 4 million people were expected to take advantage of the programme, which, however, will cost the state about 12 billion baht in missing tax revenue, he said.
All types of products and services with VAT woud be included into the tax deduction programme, except for alcoholic beverages, tobacco products, government lotteries, fuel, accommodation services and air tickets, he said.
The central bank has predicted Southeast Asia's second-largest economy could contract by a record 7.8% this year, with the key tourism industry taking a beating.