SME breaks estimated to cost government B10bn

The Revenue Department has initially estimated that tax incentives offered to attract small and medium-sized enterprises (SMEs) to maintain only a single financial account will cost the government 10 billion baht in lost revenue.

That estimate is based on the current number of SMEs, but the expected increase in those paying tax could offset the foregone revenue, deputy director-general Sompong Tantapart said.

Registration for SME operators who intend to conduct only a single financial account started yesterday and will run until March 15.

Those with annual sales of no more than 500 million baht and registering with the Revenue Department will be exempted from backdated tax scrutiny.

Moreover, registered SME operators with registered capital not exceeding 5 million baht and revenue of 30 million or less for the 2015 accounting year will have no tax burden for the 2016 accounting year, only 10% corporate tax for net profit of over 300,000 baht for the 2017 accounting year and tax exemption for net profit of no more than 150,000.

They will resume paying normal tax rates from 2018. SMEs are currently exempt from corporate tax for net profit of no more than 300,000 baht but pay 15% tax for net profit of 300,0001 to 3 million baht and 20% for net profit of more than 3 million.

The first reading of a royal decree that allows SMEs with registration at the Revenue Department to be exempted from backdated tax scrutiny has already won the nod from the National Legislative Assembly.

Thailand has 600,000 registered juristic entities and 400,000 run businesses, while 98% have annual revenue of no more than 500 million baht.

It has long been practice for SME operators to have more than one financial account and submit the smallest one to understate tax liability.

Mr Sompong expressed confidence that all SMEs qualified to participate in the single financial account scheme would register with the department to receive the tax windfall.

Another approved measure for the scheme is that financial institutions can use only financial accounts and balance sheets filed with the Revenue Department as documents for loan approvals, as of Jan 1.

The department plans to consider additional tax and non-tax measures to encourage SMEs to hold only one financial account, Mr Sompong added.