Taxing decisions: Thai businesses brace for higher import duties
Thailand’s business entrepreneurs are leaning towards higher import tariffs should the government forge ahead with its ambitious tax reform plans, according to a fresh poll from the Federation of Thai Industries (FTI).
This survey follows hot on the heels of Finance Minister Pichai Chunhavajira unveiling a set of tax reform proposals designed to swell state coffers, fuel national development, sharpen competitiveness, and level the playing field at home.
Among the proposed shake-ups is a hefty hike in value-added tax (VAT) from the longstanding 7% to a steep 15%, a rate untouched since 1992.
The reforms would also slash corporate income tax to bolster global competitiveness in line with Organisation for Economic Co-operation and Development (OECD) recommendations.
The OECD has recommended a uniform corporate tax rate of 15% for businesses globally, whereas Thailand presently stands at a 20% rate.
ML Peekthong Thongyai, FTI Vice Chairman, revealed that nearly half (48.8%) of the 125 FTI executives and business leaders surveyed champion import tariff adjustments as their top choice.
Adjustments to the corporate income tax rate came in second, garnering 44.8% support, closely followed by tweaks to land and building taxes at 38.4%, while a VAT increase lagged behind with 32.8% backing.
Respondents stressed the importance of tariff tweaks to keep local manufacturers in the race and brace for the expected ripples of a brewing trade war this year.
The backdrop to this concern? US President Donald Trump’s additional 10% tariff levied on Chinese goods heading stateside, triggering retaliatory measures from Beijing.
The Joint Standing Committee on Commerce, Industry and Banking has raised alarm bells about the US-China trade spat, fearful of a tide of cheap Chinese imports flooding into Thailand and potentially disrupting 23 industrial sectors.
A notable 62.4% of those polled are dead against hiking the VAT rate. Tanit Sorat, Vice-Chairman of the Employers’ Confederation of Thai Trade and Industry, previously warned that bumping up VAT could jack up production costs across the supply chain, Bangkok Post reported.
Take fish cans, for example, they require tinplate, coating lacquer, and an array of labelling and packaging materials, all of which would see price hikes under a heftier VAT regime.
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