E-Tax to boost government revenue

The Revenue Department recently claimed the government’s electronic tax (e-tax) and its single financial account scheme would be expected to add a minimum of 100 billion baht a year to the overall value-added tax (VAT) income stream.

The director-general of the Revenue Department said VAT from domestic purchases and services will jump by at least 30 percent once the e-tax and single financial account scheme are enforced.

He noted that fiscal 2015 had seen the department gather 708 billion baht from VAT, with 350 billion of this from domestic consumption.

While the government recognizes its tax incentives designed to encourage small and medium enterprises (SMEs) to maintain a single financial account will cost it around 20 billion baht in lost revenue, the Revenue Department has said it will more than make up for this drop by the number of SMEs who have registered to become part of the formal tax system.

There are more than 430,000 SMEs who have registered to become part of the single financial account system, and the indirect taxes they will now be paying will boost government coffers substantially.

Those SMEs with annual sales of up to 500 million baht that registered with the Revenue Department will be exempt from backdated tax scrutiny.

SMEs with registered capital of up to five million baht and annual revenue of up to 30 million baht for the 2015 accounting year will not be required to pay income tax for 2016. They will only be required to pay 10 percent corporate tax for net profits above 300,000 baht for the 2017 accounting year. They will also have a tax exemption for net profits of no more than 150,000 baht. They will start paying normal tax again in 2018.

SMEs are presently exempt from corporate taxes for net profits of no more than 300,000 baht per annum, but pay 15 percent tax on net profits of 300,001 to three million baht and 20 percent tax on net profits above three million baht.

The Revenue Department has stated it may not need to raise the VAT level above its current seven percent if it can bring in more revenue from the e-tax and single financial account schemes.

E-tax invoices and e-receipts are planned to be rolled out on 1 October this year, while e-withholding tax will commence on 1 January 2017.

The government is rolling out a national e-payment system which is designed to enable people to transfer money and make financial transactions using the ID card, mobile number or email address.

Once the e-tax module is properly in place, all e-payment transactions will be fed into the taxation data system to improve its efficiency.