Draft legislation to collect taxes from multinational enterprises (MNEs) to prevent the shifting of profit to subsidiaries located in countries with a lower tax base is scheduled to be presented to the cabinet for approval in the next two weeks, says Deputy Finance Minister Julapun Amornvivat.
Mr Julapun said the Top-Up Tax Act will be enforceable by 2025, in line with the international agreement timeline.
He said the first meeting of economic ministers held on May 27 discussed this new act, while the Board of Investment expressed concerns about meeting the deadline because of numerous economic issues that require prioritisation.
Mr Julapun assured the meeting the legislative process has begun and the law can be enforced by 2025.
By the end of 2024, the approval process for this law should be completed, he said.
The Revenue Department estimates the law will increase revenue by 20 billion baht per year, said Mr Julapun.
The concept of the top-up tax or global minimum tax was initiated by the Organisation for Economic Co-operation and Development, requiring participating countries to set a minimum corporate income tax rate of 15% to prevent tax competition to attract investment.
If taxes are paid in a country where a subsidiary operates at a rate lower than 15%, the country where the parent company is headquartered can collect additional taxes from the difference between the paid rate and the minimum tax rate.
The tax applies to MNEs with total revenue of at least €750 million.
In separate news, he said the Finance Ministry is preparing to propose to the cabinet a measure to impose a 7% value-added tax on goods imported from abroad valued under 1,500 baht.
Initially the Customs Department will be tasked with collecting this revenue on behalf of the Revenue Department, as the latter's system will not be ready until 2025, said Mr Julapun.
The system must be integrated with the platforms of both domestic and international companies.
Regarding the revival of the long-term equity fund (LTF) to stimulate the local stock market, he said there is no clarity yet on whether it will be reinstated.
He said there are various options under consideration, such as expanding tax benefits for current funds such as the Thai ESG Fund.
Finance Minister Pichai Chunhavajira said in the middle of May reintroducing LTFs would help lift the Stock Exchange of Thailand's market capitalisation.
According to Mr Pichai, guidelines for reviving LTFs have already been proposed to the Revenue Department for consideration.
The department plans to evaluate the feasibility of reinstating tax incentives for investments in LTFs, including a required holding period for units to qualify for tax benefits.
In the past, investments in LTFs tallied 300-400 billion baht, indicating their popularity.
The holding period for LTF units was initially set at five calendar years, then extended to seven calendar years.
The purchase value of LTF units could be deducted from an investor's personal income tax. This benefit expired on Dec 31, 2019.
New tax deductions for long-term investments were introduced called Super Savings Funds (SSFs) in 2020.
Investors could purchase SSF units up to 30% of their assessable income, not exceeding 200,000 baht in total.
Combined with investments in other retirement funds, the total value cannot exceed 500,000 baht. In addition, the investment units must be held for a period of at least 10 years.
The conditions for LTF investments allowed people to purchase LTF units equivalent to 15% of their assessable income, and when combined with investments in other retirement funds, the total could not exceed 500,000 baht.
