Revenue Department boss Kulaya Tantitemit emphasised that her department had sent out 100,000 letters to individuals and entities who should be reporting for tax. Certainly, this is not yet linked to the Kingdom’s plan to tax foreigners resident in Thailand. However, from January 1st, it will be.
There are fears that Thailand’s deteriorating economy may put further pressure on the Kingdom’s tax collection agencies. On Monday, Revenue Department boss Kulaya Tantitemit emphasised that her department had sent out 100,000 letters to individuals and entities who should be reporting for tax. Certainly, this is not yet linked to the Kingdom’s plan to tax foreigners resident in Thailand. However, from January 1st, it will be. In addition, it is coming at a time when exchequer income in Thailand appears to be falling. For instance, it fell 1.5% in the eight months up to the end of June this year.
The Revenue Department Director-general revealed on Monday that it has begun its expansion of the country’s tax base.
In short, 100,000 letters have been sent out by the office to identified individuals or entities who should, presently, be reporting for tax.
Ms Kulaya Tantitemit explained that so far 50,000 of those notified have responded. At the same time, she revealed that total government revenue for the opening eight months of the Thai fiscal year was down by 1.5%.
Government revenue down by 1.5%, economic recovery expected in the last quarter of 2024
The revenue generated was ฿1.68 trillion, which was off by 1.5%. However, tax receipts for the period did rise by 0.6% to ฿1.37 trillion, with the loss coming in the Excise Department.
Here, receipts were 13.3% below target at ฿349 billion, off by ฿53.4 billion. Meanwhile, the Customs Department collected ฿79 billion, which was 3.6% ahead of target, netting ฿2.73 billion more.
In summary, Ms Kulaya expressed optimism that the economy would recover in the last quarter of 2024.
Significantly, in the last week, there have been fears arising that this may not be on the cards.
In particular, a briefing was given last Thursday by the new Chairman of the National Economic and Social Development Council (NESDC), Supavud Saicheua.
Presently, the only confirmed metric for Thailand’s economy is 1.5% growth in Quarter One of 2024.
Certainly, that was confirmed in May by the Secretary-General of the body, Mr Danucha Pichayanan. Even then, the figure shocked a Reuters Poll. Most analysts had suggested only 0.7-0.9% growth.
New NESDC Chairman questions optimistic economic growth projections for late 2024
At a seminar on Thursday, however, Mr Supavud questioned assumptions being made by the Bank of Thailand on Quarter Three and Quarter Four growth rates.
In short, he questioned the Bank of Thailand’s projected economic growth rate of 2.5%. Undoubtedly, his warning must be taken seriously as the Chairman of the body responsible for calling GDP performance.
In the meantime, some economic agencies and analysts have reduced their estimate already to 2.2%. Notably, last year, the country’s economy only grew by 1.9%.
Mr Supavud said he believed that US interest rates would be cut in November this year.
However, he insisted that if President Donald Trump won the US General Election, then his policies may lead to further inflationary pressure.
In effect, this could produce a more hawkish Federal Reserve policy than expected.
Second Trump Presidency threatens further damage to the baht, the economy and Thai money markets
At the same time, the new NESDC Chairman said he believed Thailand’s interest rates should be lower.
‘I personally believe the central bank should have cut its policy rate last year, but it did not. As a result, the tightening monetary policy has caused the country’s GDP growth to be lower than expected this year. The current policy rate of 2.5% is too high and does not support economic growth,’ Mr. Supavud declared.
Decline in property sector as lower interest rates are urged by new NESDC Chairman
At the same time, Ms Kulaya, the Revenue chief, noted that the country’s property sector had slumped this year. Consequently, the government had lost significant income.
She expressed some hope that a government stimulus programme offering reduced transfer fees might give a flip to the industry.
In particular, the Revenue Department’s chief pointed to ฿65 billion made available at preferential loan rates to property developers. In short, this is understood to have come through the Government Savings Bank.
Nevertheless, part of the government’s package for developers was a reduction in corporate tax linked with affordable homes. These are homes valued at under ฿1.5 million.
Meanwhile, she highlighted buoyant revenue from the financial industry, energy sector and tourism at this time.
Consumer confidence at its lowest since October 2023, political instability and reduced purchasing power cited
This comes in the same week as Thailand’s Consumer Confidence Index dipped to the lowest level since October 2023.
The news came from the University of the Thai Chamber of Commerce (UTCC). The June index fell from 60.50 to 58.9 reflecting deepening concern. The reasons are numerous.
Undeniably, increased political instability and a fall in purchasing power by ordinary people have made people more cautious.
Undoubtedly, there is a plummeting lack of confidence in the current government’s stewardship of the economy.
In the meantime, ministers have scheduled July 24th to announce details of its Digital Wallet giveaway. Planned to commence in the last quarter of 2024, it is now proposed to be funded directly from the government’s own budget for 2024 and 2025.
Government plans for Digital Wallet giveaway amid lower economic performance and exchequer pressure
Certainly, there is a danger of lower-than-expected economic performance. Simultaneously, heightened pressure on the exchequer may see the Revenue Department emphasising its efforts to expand the tax base.
In particular, all eyes will be on Ms Kulaya from January to March 2025 as expats and foreigners are required to make tax returns on remitted income to Thailand. This will be for 2024.
Moreover, there are expectations that before the end of the year, there will be clarification on key aspects of this plan. In particular, on the timing and implementation of the government’s plans to further widen the scope of taxation on foreigners.
In brief, it plans to apply the universal income principle. At length, tax reporting will be required by all foreign residents on all their income to the appropriate authority here in Thailand.
Thai taxman now plans to tax foreigners on all income whether it is remitted to the kingdom or not under global tax rule
Some Expat foreign residents face a base tax bill of up to ฿71k a year and must file a return by March 2025
New tax era in Thailand begins as Revenue now shares data with 138 countries within the OECD
This unprecedented step will require clarification across a range of issues given the different nationalities involved.
For instance, most US taxpayers will not be affected by the change as they legally are required to report annually to authorities stateside.
However, even this may require clarification given differences in overlapping laws and treaties.
In the absence of guidance or clarification, the Revenue Department may end up swamped with queries and demands for clarification from foreign residents and their advisers.
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Further reading:
New tax era in Thailand begins as Revenue now shares data with 138 countries within the OECD
Calls for clarification of new Tax regime which appears to target expat foreign income sources
10 year visa a magnet for global citizens setting up in Thailand with zero tax on offshore income
Wealthy foreigners to own small landholdings associated with homes here agreed in principle
New plan for the Thai economy could see an elite foreign visa scheme generate up to 6% of GDP
Economic plan to put the smile back in Thailand’s appeal to western foreigners to live and work
IMF urges government to loosen nation’s purse strings as finances tighten with the tax take down
Plan to allow high tech and skilled foreigners to live and work in Thailand for up to four years
