A one-year extension of tax incentives to encourage owner-operators to register as juristic persons is projected to add 100,000 corporate entities in Thailand, says the Revenue Department's chief.
The tax measure extension, retroactive from Jan 1, 2018, should attract an additional 100,000 owner-operators to convert to juristic persons after the lapsed tax incentives led 70,000 owner-operators to become corporate firms, said Prasong Poontaneat, director-general of the department.
The cabinet this month approved the extension of tax incentives for one year (Jan 1-Dec 31, 2018) for owner-operators who sign up as juristic entities. Several owner-operators asked for an extension after the tax measures expired at the end of last year, he said. But the new incentives do not include waivers for a 3.3% specific business tax and duty stamp, which were part of the initial package.
In late 2016, the cabinet approved tax perks to include allowing juristic entities with registered capital up to 5 million baht and annual sales of no more than 30 million to deduct expenses incurred from juristic person registration, while the accounting and auditing fees and transfer fees were cut to 0.01% from 2% of appraisal value for property and condominiums.
There are 800,000 owner-operators across the country. Owner-operators who are goldsmiths, construction contractors, used auto part distributors, retailer and jewellers should register as juristic persons as their tax burden will be cut, he said.
Some 15,000 out of 17,000 goldsmiths nationwide have been signed up as corporate entities, said Mr Prasong.
For pharmacies, he said over 10,000 owner-operators are keen on converting to juristic bodies but laws prevent them from transferring operating licences, creating a major stumbling block.
Mr Prasong said those who sign up as small and medium-sized enterprises (SMEs) are liable to pay lower taxes as juristic persons than owner-operators because SMEs get a larger tax exemption at 300,000 baht of profit compared with the 150,000-baht exemption for individual taxpayers.
SMEs are also subject to a flat tax rate of 15% for profit between 300,001 and 3 million baht.
Moreover, the top bracket for individual taxpayers is 35%, while corporate companies are subject to a 20% income tax, he said.
Mr Prasong said SMEs that filed tax returns for the 2017 tax year earned 16% more than the previous year after the Revenue Department offered tax perks for those who kept a single financial account.
The revenue of SMEs earning up to 30 million baht a year grew at a faster pace than those with annual revenue of more than 3 million but not exceeding 500 million.