The government remains dedicated to tax reform but emphasizes that changes will be implemented as a comprehensive package that includes value-added tax (VAT), corporate income tax, and personal income tax to boost the country’s competitiveness while minimizing the effects on vulnerable groups.
Deputy Finance Minister Julapun Amornvivat stated that the ministry has not reached a final decision on the matter. Options need to be developed and submitted for consideration, including an evaluation of the potential impact on taxpayers and a timeline for reforms.
Mr. Julapun indicated that the Finance Ministry is examining VAT reforms and has yet to make a determination regarding changes. Concerning the proposed financial transaction tax on stock trades, introduced by the Prayut Chan-o-cha administration but not yet implemented, he expressed no intention of enacting the tax.
Regarding personal income tax deductions, he stated there are no plans to eliminate any deductions, as doing so would have significant repercussions.
Additionally, the study on a negative income tax (NIT) system in Thailand is currently under review, according to Mr. Julapun. The study presents three potential approaches: consolidating all welfare programs into the NIT system, integrating specific welfare programs into the NIT, or gradually transitioning welfare programs into the NIT system.
The NIT aims to combat poverty and inequality by incentivizing employment. If an individual’s income falls below a specified threshold, the government provides financial support. As their income rises, they receive additional incentives from the government during the phase-in period until their income reaches a certain level, at which point government assistance remains constant. If the individual’s income exceeds the threshold, the government support ceases.
This concept was proposed by the Fiscal Policy Office a decade ago. The NIT is often referred to as a “workfare” system, requiring individuals to work and engage with the tax system, in contrast to welfare systems where individuals may receive state benefits without employment, such as Thailand’s state welfare card program.
The NIT system also integrates individuals into the tax base, as those receiving government subsidies must file their income with the Revenue Department for verification. While the government may not initially generate tax revenue from these individuals, once their income grows and they no longer qualify for government assistance, personal income tax will eventually apply. The Revenue Department maintains a database of these individuals’ incomes, noted the ministry.
