Thailand has recorded a gradual economic recovery from the pandemic, with real GDP growth rising from 1.5% in 2021 to 2.6% in 2022.
The Finance Ministry predicts GDP growth of 2.7% in 2023, lower than its potential growth of 4-5%.
The low growth rate last year is attributed to declining exports, which contracted by 1.8%, as well as weaker foreign tourist arrivals than expected, at only 27.7 million.
To stimulate domestic spending and the fiscal multiplier effect, the Srettha Thavisin government proposed a digital wallet scheme that is estimated to cost the government 500 billion baht. The scheme hands out 10,000 baht to all Thais aged 16 and older who earn less than 70,000 baht per month and have less than 500,000 baht in bank deposits.
Implementation of the scheme remains unclear as the Council of State is vetting whether the borrowing bill is in line with the financial and budgetary discipline law.
In the meantime, the Srettha government aims to stimulate spending via a tax measure called Easy E-Receipt.
Q: What is the Easy E-Receipt scheme?
The cabinet approved the Easy E-Receipt programme, formerly known as E-Refund, which offers tax rebates of up to 50,000 baht to Thais ineligible for the digital handout.
The programme runs from Jan 1 to Feb 15, offering a tax rebate for spending at eligible businesses that issue e-tax invoices and e-receipts with certain conditions.
Q: What are the terms and conditions?
1. Purchases from businesses registered under the value-added tax (VAT) system require e-tax invoices that clearly indicate the taxpayer identification (ID) number or national ID of the purchaser.
2. The programme does not include purchases of: alcoholic beverages; tobacco; automobiles; motorcycles; boats; vehicle fuels; utility bills including water, electricity, telephone and internet; premiums for loss insurance; and any long-term services that end after Feb 15.
3. Purchases from businesses not registered under the VAT system may still be eligible for the programme, provided an e-tax invoice and e-receipt are issued, including from booksellers, book services, newspapers and magazines (in electronic form), and One Tambon One Product items registered with the Community Development Department.
4. Businesses can register for e-tax invoices and e-receipts at https://etax.rd.go.th, a Revenue Department website.
5. Participants need to submit their tax returns with corresponding receipts for spending between Jan 1 and Feb 15, with the government reimbursing the taxed amount.
As of Dec 31, 2023, there were around 5,000 registered businesses, equivalent to 127,000 business entities, taking into account their branches and subsidiaries.
Q: What are the benefits of the programme?
The Easy E-Receipt programme should make it convenient for both taxpayers and vendors as there is no need to keep paper-based receipts, which can easily be lost or counterfeited.
Every e-receipt received by taxpayers is recorded in the My Tax Account system of the Revenue Department, allowing taxpayers to track their spending.
Moreover, the Finance Ministry hopes the scheme will encourage businesses to sign up for the digital tax system, shifting towards e-government services.
Q: What are the estimated impacts to government revenue and the economy?
The ministry predicts 1.4 million people will join the scheme, spending 70 billion baht and stimulating GDP by about 0.18%.
The programme is expected to cost the government 10.9 billion baht in lost tax revenue.
Nattaporn Triratanasirikul, deputy managing director of Kasikorn Research Center (K-Research), said the scheme provides a short-term economic bump amid intensifying global risks. However, the effectiveness of the 45-day programme is unlikely to be significant, she said.
The government still has not approved a fiscal 2024 budget, meaning state spending to stimulate economic growth during the tourism high season represents a missed opportunity, said Ms Nattaporn.
Exports are a key driver of GDP growth, but they face an uncertain outlook because of safety concerns for Red Sea maritime routes, she said.
"The Easy E-receipt project aims to help the Thai economy stay afloat amid ongoing risks," Ms Nattaporn said.
The programme is for only 45 days and the beneficiaries are high-income earners, while participating shops must have the e-invoice system, blunting the impact on economic growth, she said.
K-Research anticipates GDP growth of 3.7% this year if the digital wallet scheme is implemented, but only 3.1% if it is not implemented.
Without any new stimulus, the economy would likely expand by less than 3%, said Ms Nattaporn.
Rakpong Chaisuparakul, senior vice-president of KGI Securities (Thailand), said the Easy E-Receipt programme would strengthen private consumption momentum in Thailand, surpassing last year.
"Consumption activities could pick up during the scheme, though the market still needs to monitor the outcome from the Council of State, scheduled for Jan 12, to see whether the planned borrowing bill to fund the digital wallet project is legal," he said.
Q: Which sectors stand to benefit from the scheme?
Asia Plus Securities (ASPS) said the Easy E-Receipt scheme is similar to the Shop Dee Mee Kuen tax rebate scheme, which was launched in the fourth quarter of 2020 to revive the economy during the pandemic.
In its most recent iteration, aiming to promote e-tax systems for businesses that register for VAT, the government offered a personal income tax deduction of up to 30,000 baht for the domestic purchase of goods and services from Jan 1, 2023 to Feb 15, 2023.
The Easy E-Receipt and digital wallet schemes can be used together if such transactions are eligible for both.
ASPS predicts the scheme should benefit stocks in the sectors of tourism (CENTEL, ERW and MINT) and consumer goods (CPN, CPAXT, HMPRO, ADVANC, COM7, CRC, CPALL, BJC, CBG, OSP, JMART, DCC, M, AU and SCGP), as well as companies that should gain from an economic recovery (KBANK, BBL, TISCO, TIDLOR, MTC, SAWAD, KTC, AEONTS and BAM).
Domestic plays benefiting from economic stimulus measures are projected to outperform the Stock Exchange of Thailand in the next 1-2 months, according to the brokerage.