Tax restructure projected for 2021
Internet economy likely to see attention
The Finance Ministry plans to implement tax restructuring next year in an effort to offset lower tax income and shift the economic structure because of the effect of the pandemic crisis.
The ministry has been planning tax restructuring to improve the country's taxation system and economic outlook, in line with changes in the economic landscape for the post-pandemic period, said Finance Minister Arkhom Termpittayapaisith.
The new tax structure should not have an adverse impact for the general public, striking a balance between the public and business spheres, including corporations and startups, said Mr Arkhom.
The new structure will benefit the business sector in accordance with Thailand's economic expansion, covering foreign investments in the Eastern Economic Corridor project, the Board of Investment's foreign investment promotion as well as the new S-curve industries.
He did not elaborate on the details of the planned tax restructuring.
"The existing tax structure will not function with the government's tax income and fiscal position next year, so we have been planning a new structure and implementation is slated for next year," said Mr Arkhom.
The cabinet approved in June a draft bill requiring foreign digital service providers to pay a value-added tax (VAT), making Thailand the latest country in Southeast Asia to seek a method to increase tax revenue from international technology companies, Reuters reported.
The Thai bill, which still has to be voted on by parliament, requires non-resident companies or platforms that earn more than 1.8 million baht per year from providing digital services in the country to pay a 7% VAT on sales.
Thailand has mulled taxing digital businesses for years, hoping to tap the country's internet economy, one of the fastest growing in the region.
Mr Arkhom said the government spent a lot of the fiscal budget on helping Thais and business operators who have been affected by the pandemic crisis.
The government's tax income significantly declined with the easing of the payment policy for corporate income tax.
This easing could impact the government's fiscal position next year, he said.
Tax restructuring should also attract and encourage domestic private investment, both for large Thai corporations and foreign investors, said Mr Arkhom.
Thailand's economic recovery will need more time to return to growth levels recorded before the pandemic.
Thailand's economy is expected to take two years to fully recuperate, assuming there is widespread administration of a coronavirus vaccine, according to the Bank of Thailand.
Bank of Thailand governor Sethaput Suthiwartnarueput said Thailand is the only country in the region that has recorded low investment rates, for both public and private investments, after the 1997 Asian financial crisis.
The economic landscape, both globally and locally, as well as consumer lifestyles, will change during the post-pandemic period, he said.
As a result, the private sector should adjust investment and business operations in preparation for changes and new business opportunities, said Mr Sethaput.
For instance, the automotive sector should seek investment opportunities in electric vehicles, while tourism businesses should pay more attention to wellness and medical tourism as a response to an ageing society and post-pandemic healthcare trends, he said.
"The post-pandemic period will create new business opportunities, particularly for large Thai corporations that have invested overseas to return to invest in Thailand," said Mr Sethaput.