Tax collection set for B160bn shortfall as economy falters

The Revenue Department estimates it will miss its tax collection target by no more than 160 billion baht for fiscal 2015 after it was off target by 35 billion in the five months through February.

The government’s largest revenue contributor has striven to collect new taxes such as those on tutoring schools and e-commerce to offset the potential shortfall, but lacklustre economic conditions have taken a toll on tax revenue, director-general Prasong Poontaneat said.

He said the department must also seek ways to stem loopholes used for tax avoidance but would not launch a tax amnesty because it failed to address the problem.

Government data show 600,000 companies have been incorporated.

Two-thirds of these are part of the formal tax system.

Tax collection for the first five months of the fiscal year amounted to 587 billion baht, 35 billion or 5.7% below the target.

Mr Prasong hopes tax revenue will continue to improve this month from February, but tax collection in May is his concern.

That is the season for tax filing by companies for the period last year when profitability was weakened by the economic slowdown.

Tens of billions of baht of oil companies’ profits were wiped out last year following the sharp fall in the global oil price, while car makers and related businesses have not yet made a full recovery.

The Finance Ministry recently approved the Revenue Department’s request to cut its collection target by 160 billion baht to 1.79 trillion from 1.96 trillion to reflect the slack economy.

The government’s plan to extend the rate of the value-added tax (VAT) at 7% for another year or two is not expected to put more pressure on the Revenue Department’s tax collection.

The VAT rate is due to expire at the end of September.

Mr Prasong estimates revenue from personal income tax will increase by 4-5 billion baht this year.

The filing season ends next Tuesday. Almost 90% of taxpayers have filed their tax claims, with 70% filing via the internet.

Mr Prasong supports a proposal for a regulation that all people must submit a tax filing even if their income is below the tax threshold.