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Let our experience be your guide

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Let our experience be your guide

NLA’s Latest Tax Bill on Financial Transaction Report

On 5 December 2018, the National Legislative Assembly (NLA) approved one of the most important draft bills adding Sections 3 quindecim, 3 sedecim, 3 septuordeciews and 3 octodecim to the Revenue Code. The bill includes the implementations of e-tax payments and e-tax filing but, above all, it requires financial institutions to report the Revenue Department if a customer’s deposit transactions reach (i) 3,000 times per year, or (ii) 400 times per year (increased from 200 per year under the original draft) with the total amount of THB 2 million.

While the public have mostly anticipated that the bill targets small and medium sized e-commerce businesses that are staying outside the tax system, anyone who have incoming funds to his/her bank accounts can get caught under this rule which information will be analyzed and compared to his/her year-end tax return. It is interesting to note that the bill does not say that the thresholds will be counted on the per-bank basis as claimed by the Revenue Department.

One may view this bill in breach of the privacy right and unfair to small and medium sizes while some mega e-commerce businesses are promised with tax privileges under the Board of Investment’s (BOI) or Eastern Economic Corridor (EEC) promotion schemes. However, as the Revenue Department explained, everyone is required to comply with tax payments and filings, unless they are properly granted with the tax holiday privileges. According to the Revenue Department, the bill does not aim for faultfinding, and the reports from the financial institutions will be utilized for data analytics to enhance the taxpayers’ convenience, e.g. e-withholding tax system without any requirement to file the paper tax returns in the future, to sort the taxpayers into risk based categories, so that the good ones can be qualified for quick tax refunds and easy access to the loans and financing.

At any rate, there are some realistic obstacles. At the threshold of 400 times of the incoming funds per bank means anyone can open bank accounts with all financial institutions and manage the number of the transactions to fall within the limit, which will be almost impossible for the Revenue Department to obtain the report. It is, therefore, believed that this bill could in fact be the first step for the Revenue Department to develop a platform that links information of all banks together and sweep information of a taxpayer whose overall transactions exceed 400 times a year later.

By Prof. Piphob Veraphong and Rachanee Prasongprasit

(as at 8 December 2018)

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