Smart tax move
Re: "Department to amend tax on foreign income remittance", (Business, May 19).
The director general of Internal Revenue and the Ministry of Finance are to be congratulated on their proposal to change their rules on foreign income remittances.
The new rule, which gives tax residents two years to remit their incomes from foreign sources before they become taxable in Thailand, should be applauded. As it stands, it has the potential to remove a huge administrative burden from long-stay tourists and retirees alike, which should help reinvigorate the tourism sector.
Moreover, high net wealth tax residents will be encouraged to repatriate income within the tax-free remittance period. This will encourage foreign currency inflows, help reinvigorate the Thai property market, support consumer consumption, and generally underpin economic growth at a critical time.
If there are no onerous filing requirements accompanying this proposed policy change, it is truly transformative. It rectifies what has been a thorn in the side of many long-stay expats in Thailand for the past two years and will go a long way to restoring Thailand's reputation as an attractive long-stay tourism and retirement hub to high-net-worth individuals wanting to relocate.
In rectifying this policy misstep, it would be remiss for Thai policymakers not to take note of the dangers of adopting OECD policies wholesale. Such policies may well be considered the world standard by similarly positioned EU countries that comprise the majority of the 38 OECD members. However, these very same policies may well be totally misaligned with the economic and social interests of Thailand and many other countries that are similarly positioned to Thailand sit outside the OECD. Even the US recently walked away from tax policy being forced on it by the OECD, when it too realised the policies were not in its national interests.
Thailand should not volunteer to blindly import policy from the OECD as a price of membership. The lack of suitability of OECD's tax policies in the Thai context is now clear to see. More than ever, Thai policymakers are obligated to carefully examine each of the policies demanded by the OECD accession process and determine whether they provide clear and unequivocal benefits to the Thai nation and its citizenry. If not, perhaps Thailand should reconsider whether full membership in the OECD is worth pursuing. Thailand would certainly not be the first country to conclude that OECD membership is not something it wants or needs.