ASEAN Regulatory Brief: Thai Stimulus, Indonesian Tax Amnesty, and a the Philippines’ Safety Bill
In this edition of ASEAN Regulation Brief, we take a look at Thailand’s stimulus package, and mooted tax amnesty in Indonesia, and a new safety bill in the Philippines.
Thailand: Cabinet approves economic stimulus package
The Thai Cabinet on 12 October approved an economic stimulus package designed to boost business confidence and stimulate the economy. The package consists of five measures submitted by the Finance Ministry. They are:
- Reduce corporate income tax from 23% to 20%.
- Corporate income tax exemption to be provided to government venture capital funds for a period of ten years.
- Real estate transfer fees will be reduced from 2% to 0.01% for six months and mortgage fees will be reduced from 1% to the same level for the same period.
- The Government Housing Bank (a financial institution established by the Ministry of Finance) will receive a one-year 10 million baht budget to provide low-income earners with housing loans
- New home owners who bought homes worth less than 3 million baht will be allowed to use 20% of the price of their house to reduce their corporate income tax for the next five years.
The permanent reduction in corporate taxes are expected to help Thai businesses compete in the global market as well as help small to medium size businesses get off the ground. Start-ups typically take time to build up their businesses and the ten-year tax break allows such start-ups to compete and become profitable. Local experts indicate that reduction in fees and taxes in the real estate will further help the economy as the real estate industry has a high multiplier effect. The measures are expected to help around 9,000 households whose loan applications had been rejected while the transfer of residences are also expected to be speedier. The incentives will promote home buyers to spend on future, home appliances and decorations. While the government is expected to lose around 15 billion baht in lost tax revenue, the money is expected to be recovered, once the measures spur economic growth.
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Indonesia: Income tax amnesty likely to be offered to boost revenue
Media sources on 13 October stated that the government plans to offer an income tax amnesty to help recover money back into the country. The tax break however, would exclude funds from terrorism, narcotics and human-trafficking. The draft of the law is currently being discussed by the government and a parliamentary commission. The law would be offered to taxpayers with an undisclosed wealth at home and abroad. Taxpayers who make such disclosures before the end of the year will be taxed at a 3% rate. The rate would go up progressively to 5% to those declaring in January-June of 2016 and 8% in the following six months.
However, the tax amnesty is subject to government approval and will still need to passed by parliament. In addition, reports state that the government lacks suitable tax databases and infrastructure to implement the tax amnesty. Around $220 billion is estimated to be stashed abroad by tax offenders and criminals. Nevertheless, the government expects the bill to boost tax revenue. The government has only collected 53% of its full year target between the January and September period – slightly lower than the same period last year. The government seems persistent to raise revenues and recover tax money. While the tax amnesty draft is being debated, the finance ministry has also plans to scrap the luxury tax on most goods to increase domestic spending.
Philippines: House of Representatives passes LPG safety bill
The House of Representatives on 6 September approved a safety bill seeking to regulate the Liquefied Petroleum Gas (LPG) industry. The bill, also known as the ‘LPG Industry Regulation and Safety Act’ creates a new regulatory framework for the LPG industry. Apart from protecting consumers, the bill aims to mandate rigorous standards for importing, storing, refining storage, refilling, distribution, transportation and consumption of cooking fuel.
The bill is meant to prevent the loss of life and property due to accidental LPG explosion in residential, commercial and industrial areas. In addition, every LPG installation will be required to obtain and renew annually an improved standard compliance certificate which will be issued by the Department of Energy, which ensures that the installation has fully complied with the prescribed safety rules and regulations.
The moves comes two years after a gas explosion at a condo unit in the Bonifacio Global City area of Metro Manila in which at least two people were killed.
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