Cabinet scraps perk for IBF locations

The cabinet has approved a royal decree to terminate a 10% exemption from corporate tax for international banking facilities (IBF) based on the recommendation of the Organisation for Economic Cooperation and Development (OECD).

Thailand is among the 114 countries adopting the inclusive framework for base erosion and profit-shifting (BEPS) of the OECD since 2017.

To comply with the inclusive framework, the government had planned to terminate tax privileges for IBF by 2018.

Nathporn Chatusripitak, an adviser to the Prime Minister’s Office minister, said local tax privileges create unfairness for other members of the OECD.

He said compliance with the OECD suggestion will create a better image for Thailand in terms of transparency of tax collection and prevent other members of the inclusive framework for BEPS from enacting hostile policies towards Thailand, especially on trade.

The Finance Ministry reported that IBF has been growing without any support from the government’s tax measures, while the ministry forecasts that the government will receive an additional 30 million-60 million baht a year in corporate tax from scrapping the exemption.

Mr Nathporn said Thailand will further strengthen its cooperation with the OECD, the EU and other countries in order to promote transparency in tax collection.

Separately, the cabinet gave the goahead for the Electricity Generating Authority of Thailand (Egat) to invest 7.25 billion baht in electricity transmission in order to purchase power from independent power producers.

The Energy Ministry reported that Egat signed an agreement to purchase 5,000 megawatts from large power producers, including 2,500MW each from Gulf PD Co and Gulf SRC Co.

Investment in power transmission will serve rising demand for electricity in the eastern and central provinces, as well as Bangkok, all important economic areas.

Egat will invest through its own budget, and construction of power transmission projects is expected to be completed by 2022.

Government spokesman Sansern Kaewkamnerd said Prime Minister Prayut Chan-o-cha has authorised the Energy Ministry to prepare crisis management measures and solve pertinent problems after the latest power blackouts in northern and northeastern provinces rattled public trust and derailed economic activity.

Egat is tasked with revising the power management scheme, especially with regard to small power producers, in order to ease the impact on the public and the economy.

Gen Prayut authorised Egat to consider the impact on each zone based on economic importance, Lt Gen Sansern said.