Mid-sized tax office eyed

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The International Monetary Fund (IMF) has proposed the Revenue Department set up a mid-sized tax unit to prevent tax avoidance by mid-sized business operators.

The country's largest tax-collecting agency lacks a unit to directly oversee tax collection of mid-sized companies. Some of them avoid expanding their business to sidestep being defined as a large firm and coming under the surveillance of the Large Tax Office, said a Finance Ministry source.

Mid-sized businesses can more easily manage tax bills than large firms because tax payment probes are tougher for the latter, the source said.

The department incorporated the Large Tax Office, which is in charge of examining tax payments of 3,500 large companies with annual revenue starting from 2 billion baht, as suggested by the IMF in 1997.

The office has improved the efficiency of the department's tax probes as large corporations typically have complicated transactions, including cross-border payments. District revenue offices cannot efficiently check their tax payments, said the source.

The source said tax avoidance and evasion sometimes occurs with mid-sized businesses, especially for cash transactions, because there is not a unit directly responsible for monitoring their tax payments.

Some mid-sized companies transfer operations to new companies to prevent them from being classified as large firms, said the source.

The source said firmly established mid-sized companies should grow to become large ones if they are able to do so.

The source said the department does not have a plan to tax Thais who work abroad. They are liable for tax only if they bring money into their home country or stay in Thailand for more than 180 days in a tax year. Even for Thais who fall into this category, authorities must consider whether they work in countries that have a double taxation agreement. Such Thais are subject to pay only the difference in tax if their amount owed in a foreign country is lower than Thailand, but they are tax-exempt if they owe a higher tax amount.