Pushback on VAT scheme for SMEs

Leaders say timing is not right

- WICHIT CHANTANUSORNSIRI KUAKUL MORNKUM

Even though Finance Minister Pichai Chunhavajira has decided not to impose the value-added tax (VAT) on businesses earning less than 1.8 million baht annually to increase state revenue and reduce the budget deficit, the business community and especially small and medium-sized enterprises (SMEs) are concerned that any expansion of VAT would exacerbate their struggles.

These businesses already face significant challenges, including a sluggish economy, intense competition from imported goods, and several untaxed products sold at lower prices, said Sangchai Theerakulvanich, strategy chairperson of the Federation of Thai SMEs.

"Any efforts to draw more SMEs into the VAT system should not involve introducing another VAT category," he said.

"The idea of imposing 1% VAT on businesses earning 1.5 million baht per year would only increase pressure on SMEs, which are already struggling with the economic downturn, competition from foreign imports, and untaxed goods sold at low prices."

Mr Sangchai suggested that instead of adding pressure, the government should incentivise SMEs to enter the VAT system. For instance, SMEs that register for VAT could receive government support for shop improvements or investment in software systems.

He said the Revenue Department should raise the income threshold for businesses required to enter the VAT system to more than 1.8 million baht per year, as this level has remained unchanged for decades.