Ending widespread tax evasion by SMEs in Thailand

Ending widespread tax evasion by SMEs in Thailand

Many of Thailand's estimated 2.6 million small & medium-sized businesses avoid paying large amounts of tax each year by not reporting all their income.
Many of Thailand's estimated 2.6 million small & medium-sized businesses avoid paying large amounts of tax each year by not reporting all their income.

The old tricks that some smaller Thai businesses have used to avoid paying taxes like other citizens may be coming to an end with new govt measures and technologies.


Ending widespread tax evasion by SMEs in Thailand

Wichit Chantanusornsiri

Just 40% of Thailand's 2.6 million small and medium-sized enterprises (SMEs) have agreed to enter the new government tax scheme aimed at curbing widespread tax evasion among SMEs.

SMEs typically use two or three bank accounts to obscure actual earnings in order to avoid paying corporate income tax.

The Revenue Department has tried to prod SMEs into adopting a single bank account with carrot-and-stick measures for one year now.

This is according to Prasong Poontaneat, director-general of the Revenue Department.

Besides increasing government revenue, the measures also make the tax system more fair and equitable by forcing the small and medium-sized businesses that have long-evaded taxes pay their fair share of taxes like the rest of us.


The new single-account tax payment scheme is part of the Finance Ministry's plan to bring businesses into the country's formal tax system.

Those SMEs that fail to register under a single financial bank account by March 15 will face heightened tax scrutiny for tax evasion by the revenue department. 

In other words, they run the risk of a tax audit and penalties for not paying taxes.


The new scheme does provide incentives to entice SMEs to enter the single account scheme.

The scheme allows registered SMEs with capital of up to 5 million baht and revenue of up to 30 million baht for the 2015 accounting year to have:

1. Zero tax burden for the 2016 accounting year,

2. A 10% corporate tax rate for net profits above 300,000 baht for the 2017 accounting year and

3. A tax exemption for net profits of less than 150,000 baht. Normal rates will resume from 2018.


From Jan 1, 2018, local financial institutions must use the accounts businesses submit to the Revenue Department as a key factor in considering loans.

This is according to Pipavat Bhadranavik, a representative of the Thai Bankers' Association.

"Credit lending will be in line with the revenues submitted to the authorities."

"If your revenue is low, the credit line will correspondingly be low," Mr Pipavat said.


Some 465,000 SMEs have participated in the scheme, resulting in a 4% rise in value-added tax (VAT) collected from SMEs in the 2016 tax year.

The VAT increase from SMEs with sales of over 30 million baht but not exceeding 500 million was 3% last year.


Mr Prasong divided SMEs into four categories:

1. Those ready to register with a single account,

2. Those hesitant because they believe officials might find evidence of their tax evasion,

3. Those willing to understate payments, and

4. Those who will never enter the tax system.

"Some people think it is fine to take a risk because they believe they can come in and negotiate with officials, but they don't know we have an upgraded IT programme to reduce human interaction in tax calculation and collection."

"This makes it easier to trace records, making it easier to catch both SMEs and officials in evasion. If caught, both will face a criminal charge," he said.


"Other signs can suggest wrongdoing."

"For example, some SMEs in the North reported a combined accrued earning of 30 billion baht, but instead of a dividend payment, the companies' debtors were also their directors. This does not make sense."


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  • according to (prep): as stated or reported by somebody/something - ตามคำบอกเล่า, ตามรายงาน
  • account: bank account; money kept in a bank - บัญชี
  • accrue: to gradually increase in amount - ทำให้เพิ่มขึ้น
  • actual: real; existing in fact - จริง
  • adopting: accepting or starting to use something new - นำมาใช้
  • aim: to have as your purpose or goal - มีเป้าหมาย มีจุดมุ่งหมาย
  • association: an official group of people who have joined together for a particular purpose - สมาคม
  • audit: to officially examine the financial records of a company, organisation, or person to see that they are accurate - สอบบัญชี
  • authority (noun): a person or government agency who has the power to make decisions or enforce the law - เจ้าหน้าที่ผู้มีอำนาจ
  • avoid: to try to prevent something from happening - หลีกเลี่ยง
  • burden: a serious or difficult responsibility that you have to deal with - ภาระ
  • calculation: the act or process of using numbers to find out an amount - การคาดการณ์
  • capital: a large amount of money that is invested or is used - ทุน, เงินทุน
  • carrot-and-stick: using the carrot or rewards and the stick or punishment to make people do what you want them to do -
  • charge : an official statement accusing someone of committing a crime - ข้อกล่าวหา
  • collect (verb): to gather together a group/set/amount of things, often of the same sort - สะสม, เก็บรวบรวม
  • combined: counted together - รวมกัน
  • corporate income tax: income tax for companies (as opposed to "personal income tax" for individual people -
  • corresponding (adj): matching or connected with something that you have just mentioned - ที่สอดคล้อง
  • credit (noun): money loaned to people - เงินกู้
  • credit line (noun): money that can be borrowed if needed; already approved - เพดานสินเชื่อ; วงเงินสินเชื่อ
  • criminal: relating to illegal acts - เกี่ยวกับอาชญากรรม
  • curb: to control or limit something that is harmful - ระงับ, ควบคุม
  • debtor: a person who owes money - ลูกหนี้
  • director: one of a group of senior managers who run a company - กรรมการบริษัท
  • director-general: the head of a large organisation, especially a public organisation - อธิบดี
  • dividend: a share of the profits of a company, paid once or twice a year to the people who own the company’s shares - เงินปันผล
  • earnings (noun): the profit that a company makes; the money a worker is paid; money received from investments - รายได้, กำไร, ผลกำไร
  • entice: persuade someone to do something by offering them something pleasant - ล่อใจ
  • equitable: treating everyone equally, giving no special benefits to any group -
  • evidence: facts statements or objects that help to prove whether or not someone has committed a crime - หลักฐาน
  • exceed: to be more than something; to go beyond a limit - เกินกว่าที่กำหนด
  • exemption: permission to not have to do something, such as making a payment, following a rule, etc. - ข้อยกเว้น
  • fair: acceptable and appropriate in a particular situation - เท่าเทียม, ยุติธรรม
  • Finance Ministry (noun): the ministry in charge of managing the country's money - กระทรวงการคลัง
  • financial: involving money - เกี่ยวกับเงิน, ทางการเงิน
  • financial institution: a business which helps its customers manage money, e.g., a bank, insurance company, etc. - สถาบันการเงิน
  • force (noun): making someone do something that they don't want to do - การบังคับ
  • formal: official; following an agreed or official way of doing things - เป็นพิธี,ตามแบบ,ตามระเบียบ
  • heightened: increased -
  • hesitant (adj): slow to speak or act because you feel uncertain, embarrassed or unwilling - ลังเลใจ, สองจิตสองใจ, ไม่แน่ใจ
  • in line with: similar to or corresponding with another thing - สอดคล้องกับ
  • in order to (prep): to cause something, to make something happen - เพื่อ, เพื่อที่จะ
  • incentive: something that makes you want to do something or work harder, because you know that you will benefit by doing this - สิ่งกระตุ้น
  • income tax (noun): the percentage of the money that a person or corporation earns that they pay to the government as tax - ภาษีเงินได้, ภาษีรายได้
  • lend (verb): (past form: lent) to give money to someone who agrees to pay it back in the future - ให้ยืม
  • lending: giving money to someone who agrees to pay it back in the future - การให้ยืม
  • local (adjective): in this country (Thailand) -
  • measure: a firm action taken to solve a problem or stop a dangerous unpleasant situation - มาตราการ
  • negotiate: to try to reach an agreement by discussing something in a formal way - เจรจาต่อรอง
  • normal (adj.): typical, usual or ordinary; what you would expect - ปกติ, ภาวะปกติ
  • obscure: to prevent something from being seen or heard - ปิดบัง
  • officials: people who have the power to make decisions or enforce the law - เจ้าหน้าที่ผู้มีอำนาจ
  • participate: to take part in or become involved in an activity - มีส่วน
  • penalty: a punishment, or the usual punishment, for doing something that is against a law - โทษ
  • prod: to push someone/something quickly - แหย่, แยง
  • profit: money that you make from selling goods and services after all your costs have been paid - กำไร
  • rate: an amount of money that is paid or charged - ราคา, อัตรา
  • record (verb): to make a written account of something that is kept so that it can be looked at and used in the future - บันทึก, รายงาน
  • register: to put your name and other information on an official list in order to be allowed to do something, e.g., vote, study, stay in a hotel etc - ลงทะเบียน
  • representative: someone who has been chosen or elected by a person or group to vote, give opinions, or make decisions for them - ผู้แทน
  • revenue: income from taxes or business activities - รายได้
  • Revenue Department: the government department responsible for collecting taxes - กรมสรรพากร
  • scheme: a plan that is developed by a government or large organisation in order to provide a particular service for people - แผนการ โครงการ
  • scrutiny: careful and thorough examination - การตรวจสอบอย่างละเอียด
  • single: one only - เดี่ยว
  • submit: to formally give something to someone so that can make a decision about it - ยื่น (เอกสาร) เพื่อการพิจารณา
  • tax: money that you have to pay to the government so that it can pay for public services - ภาษี
  • tax evasion: deliberately not paying the taxes you owe - การหนีภาษี
  • trace: to follow the evidence to find out something - ตามรอย ตามทาง
  • typically: usually; normally - อย่างเป็นแบบฉบับ
  • understate: making something seem less important, serious, big, etc. than it really is - ข้อความที่ไม่ครบตามความจริงทั้งหมด ที่ไม่เต็มเม็ดเต็มหน่วย
  • upgrade: to make a project, a piece of machinery, computer system, etc. more powerful and efficient - ยกระดับ
  • value-added tax: a tax that is added to the price of goods and services - ภาษีมูลค่าเพิ่ม
  • widespread: happening or existing in many places, or affecting many people - อย่างแพร่หลาย
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