The Cabinet approved big changes in the individual income taxation structure.
In the executive decree, the maximum tax rate is lowered from 37 per cent to 35 per cent while tax brackets are expanded from five to seven during the 2013 and 2014 tax years.
Under the new brackets, the minimum 5 per rate will also be applied with taxable income up to Bt300,000, against Bt100,000 now. Those with taxable income below Bt150,000 will remain exempted from individual income tax.
Earlier, former Revenue Department director-general Satit Rungkasiri said that the change would dent the government’s tax revenue by Bt25 billion per annum. As taxpayers will pay lower taxes, this should boost domestic consumption and benefit the economy in the long term. Moreover, this would make Thailand attractive for overseas workers, which is crucial under the regional integration in Asean.
Cabinet approves new income tax ladder; 30k/month earners see tax halved
The Cabinet has approved a bill that will result in the income tax rate on those earning between 150,000 and 360,000 baht per annum falling to 5%.
According to Ms. Bencha Luicharoen, the deputy minister of finance, the increase of income tax ladders from 5 to 7 steps was aimed at reducing tax burden on lower-income people. Previously, the 10% tax applied to those earning between 100,001 baht to 500,000 baht a year. The new tax ladder will incur 5% tax on those earning between 150,000 baht and 360,000 baht per year. Effectively, those who earn up to 30,000 baht per month will have their income tax halved. Under the new ladder, those earning less than 150,000 baht per year will be exempt from personal income tax.
Ms. Bencha indicated the restructuring is expected to cost the government 27 billion baht in terms of revenue, but this trade-off will allow consumption to be boosted, which will benefit the national economy.
The new tax ladder will take effect for tax year 2013, meaning the new ladder will be used to calculate income tax during the January-March 2014 filing period.