Thailand to double tax breaks on new projects
Tax breaks on investment projects are set to double if the projects begin this year, according to a proposal submitted to the Cabinet this week by the Ministry of Finance with the aim of accelerating investments in the Kingdom, as investment is one of the three pillars that drive the Thai economy.
Somchai Sujjapongse, the ministry’s permanent secretary, told reporters that investors will be able to double their tax deductions if they start a project in this year, adding that new projects will not need to be completed within the year to qualify. He urged the private sector to step up or begin investing before the incentive ends.
“They have no need to complete their projects this year but they must start them before the double deduction ends this year,” Somchai said at the Krungsri Business Forum, attended mainly by entrepreneurs.
The Ministry repeated its forecast that the economy will improve in the second and third quarters as public investment picks up when the government launches more of its infrastructure megaprojects.The ministry is predicting 3.3 percent economic growth this year, a bit higher than the central bank’s forecast of 3.1 percent.
The government has pledged to launch 20 major infrastructure investment projects this year, many of them road and rail projects to advance the country’s logistics. The total value of the combined infrastructure projects on the government’s list for this year and next exceeds $60 billion.
Somchai said the government had been trying to drive growth through fiscal policy for the past six months, including investment in small projects. But the measures haven’t prompted as many investors to commit as the government was hoping for.
Luxmon Attapich, Thailand senior economist at the Asian Development Bank, told the forum that the government’s clear signals and commitments on investment would bring in private investment. Consequently, the ADB’s view on Thai economic growth in the second half of 2016 is better than in the first half.
The Bank has forecast Thai growth in 2016 of 3 percent and 3.5 percent next year. Luxmon said, however, that the country should register 4.5 percent growth, and attributed the shortfall to weak human resource productivity.