NLA gives nod to one percent VAT increase and “windfall tax”

The National Legislative Assembly has approved a tax reform package report of the Committee on Economic, Monetary and Financial Affairs which include, among others, a recommendation that value-added tax be increased by one percent to 8 percent and the introduction of “windfall tax”.

Besides VAT increase by one percent, the panel proposed that there should be different VAT rates for different products depending on their necessity for import, export or domestic consumption.

Revenue earned from the VAT increase will be used for education and public health only and the government is expected to earn 60-70 billion baht more from the VAT increase.

The “windfall tax” is to be collected from landowners who indirectly benefit from the construction of infrastructure projects such as the train project in the way that the prices of their land plots have increased.

So far, the government lacks the legal basis to demand tax from landowners for the increased value of their land plots as a result of the development of infrastructure mega-projects.

The panel suggested that the National Economic and Social Development Board conduct a study how to enforce the “windfall tax” by studying similar tax applied in the other countries.

As for corporate tax, the panel proposed separate accounting and tax returns for corporation which has different branch offices in different districts instead of just one tax returns and one accounting book.