Cabinet to mull SME tax perk

The proposed tax exemption for owneroperated small and medium-sized enterprises (SMEs) that register as juristic persons will be sent for cabinet approval soon.

To encourage these SME operators to register as juristic persons, the Finance Ministry will set the period when they are able to do so in exchange for the tax incentives, said Finance Minister Apisak Tantivorawong.

The tax perk is aimed at persuading family-owned or owner-operated small businesses to pay the correct amount of income tax.

The Finance Ministry said running a business as a juristic person would give owner-operators better benefits.

For example, responsibilities when companies file for bankruptcy are more limited, juristic persons are given higher credit as they must have registered capital and exact operating locations, and selling a business or seeking new partners can be done more easily.

The Finance Ministry recently unveiled a single financial account, with over 400,000 SME operators registering for the scheme, which aims to convince small businesses to pay their tax bills accurately.

Under the scheme, registered SMEs with annual sales of up to 500 million baht are exempt from backdated tax scrutiny. Those with registered capital not exceeding 5 million baht and revenue not exceeding 30 million baht for the 2015 accounting year have no tax burden for the 2016 accounting year.

Corporate income tax at 10% will be imposed on those with net profits exceeding 300,000 baht for the 2017 accounting year, while tax exemption will be allowed for net profits of up to 150,000 baht.

SMEs will resume paying normal tax rates from 2018. They are currently exempt from corporate tax for net profits of up to 300,000 baht but pay 15% tax for net profits of 300,001 to 3 million baht, and 20% for net profits of more than 3 million baht.

Given the hefty investment plan in 20 big-ticket infrastructure projects and Thailand’s ageing society, the Finance Ministry is seeking new sources of tax income and stemming loopholes used for tax dodging.

Encouraging SME operators to enter into the formal tax system is another way to help boost government coffers as most of them understate or evade income tax and often sell products and services without valueadded tax (VAT).

Meanwhile, Prasong Poontaneat, director-general of the Revenue Department, said owner-operated SMEs who transform into juristic entities will also enjoy waivers for taxes incurred from transfers such as VAT, specific business tax and stamp duty.

Registering as juristic persons will be a boon to SME operators as they will not need to avoid tax probes, while the advent of the national e-payment will allow the Revenue Department to track tax payments more easily, he said.