VAT gradually falling short of 2019 target

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The Revenue Department estimates that value-added tax (VAT) collection will fall short of the target for this fiscal year because of waning domestic consumption and the stronger baht, and the shortfall could extend to next year if the situation remains unchanged.

VAT collection, an indicator of domestic consumption, was 0.5% lower than targeted for the nine months through June. The shortfall grows to 2.1% if the primary data for July is included, said Ekniti Nitithanprapas, director-general of the department.

Tax receipts expanded 3.7% in fiscal 2017 and 5.6% in fiscal 2018.

Weak VAT collection in the next fiscal year could continue if domestic consumption remains tepid and the baht’s strength persists, Mr Ekniti said.

The slowdown in VAT income was noted after May, down 5.6% and 9.1% from targets in June and July.

VAT from domestic sales and services and imported goods provides equal contributions to the Revenue Department. The firmer baht is also dealing a blow to VAT collection as imported goods shrink in value.

 

VAT is the department’s largest revenue contributor at 70-80%.

The baht has gained about 6% against the US dollar in the year so far, making it the best-performing currency in Asia.

Despite the VAT revenue shortfall, the department’s tax collection still exceeded the target by 48 billion baht for the first nine months of this fiscal year, Mr Ekniti said. The agency’s target of 1.9 trillion baht is expected to be reachable.

Mr Ekniti said the department is pushing an e-business law to impose VAT on online platform operators that lack a physical presence but earn income in Thailand, aiming to level the playing field with local platform operators.

The draft law is being deliberated by the Council of State.

Under the bill, digital platform operators providing services (including online games, sticker downloads, online ad, digital content and online hotel bookings) and generating annual sales of more than 1.8 million baht from Thais are required to register for VAT payment and are subject to sales tax.

The department has also worked to bring local online platform operators into the formal tax system.

Source link: https://www.bangkokpost.com/business/1745854/vat-gradually-falling-short-of-2019-target


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