New Personal Income Tax Scheme Announced
It’s good news for individual Thai taxpayers this month as Thailand ends the year moving towards a fairer tax system. On the 19th November, the cabinet agreed to issue a royal decree which will make sure revised personal income tax structures takes effect during the 2013 tax year. While this is the case, it’s worth bearing in mind that the Council of State is yet to pass the bill, therefore although rates will be retroactive for the 2013 tax year, there is no approval to implement the rates at this time.
Individual taxpayers will start to see their net income bracket increase, as their income tax falls, saving the average taxpayer up to Bt7,500 annually, thanks to the scheme set to make working in Thailand more attractive for foreigners.
What Are The Changes?
Under an executive decree approved by the Cabinet at the end of November, the number of income tax brackets will be expanded from five to seven during the 2013 and 2014 tax years, while the maximum tax rate was lowered from 37 per cent to 35 per cent.
The new 5% rate will be applicable to those earning between 150,000-300,000 baht a year, with 10% for those who earn 300,001-500,000 baht, 15% for 500,001-750,000 baht, and 20% for 750,001 baht to 1 million.
What Does It Mean For Taxpayers?
The expansion of these brackets will benefit low-income taxpayers the most, as it will save the most in percentage terms, subsequently high-income earners will save the least. While news of the tax scheme is set to benefit a majority in Thailand, it’s not without its costs. Former Revenue Department Director-General Satit Rungkasiri said the change would dent the government’s tax revenue by Bt25 billion per annum. But as taxpayers pay lower taxes, this should boost domestic consumption and benefit the economy in the long term.
The decision comes at a time when the Thai economy needs a shake up from it’s recent sluggish movement. With high hopes of stimulating economic growth, the move is seen as a positive step to getting Thailand back on track.