The government is again considering offering the tax breaks which will be worth 15,000 baht during upcoming holidays, according to Deputy Finance Minister Visut Srisupan.
Mr Visut mentioned that this will be the same as last year, but they will likely extend it to longer than seven days.
Incentive for consumers
In 2015, the Finance Ministry had offered tax breaks that amounted to 15,000 baht for every person in the last 7 days of the year, which added 0.2 points to the GDP growth.
This incentive gave rise to consumers spending money at shopping malls around the country, where it resulted to a combined spending projected at 150 billion baht in the last 7 days of last year.
Although Mr Visut did not mention any specific details, a senior official said that the ministry is thinking of giving a two-week or one-month holiday tax break period.
Mr Visut mentioned that within the last year, the government gave its support to the small and medium enterprises as well as the farm sector. However, the consumption still continued to be stagnant because of the slow progress in the purchasing power.
During last year, two million and more middle- and high-income earners were urged to spend more to take advantage of the tax benefits, where the government had 4 billion baht for tax rebates.
The tax incentive scheme
With last year’s tax incentive scheme, an individual who has an income tax rate of 20% qualified for a 3,000 baht savings when spending 15,000, while an individual who has an income tax rate of 10% qualified for a 1,500 baht savings when spending 15,000.
Currently, the tax rate is zero for an individual earning less than 150,000 baht, and almost 35% for an individual earning greater than 4 million baht.
In order for an individual to qualify for a tax deduction, every transaction should be verified in a VAT invoice, since this is meant to push service and product providers to pay the VAT for them to be eligible.
In sum, if this will be implemented by the government, consumers are more likely to splurge, such as those cosmetics desired for or even that New Year kaiseki in Bangkok shared with the family. In addition, both the government and consumers will benefit from this tax incentive scheme.