Hawaii's 'AA' general obligation (GO) bond rating reflects our view of management's well-established budget monitoring practices and strong reserve levels, according to a report published today by Standard & Poor's Ratings Services.
"We believe that Hawaii's proactive budget management techniques will result in manageable out-year gaps that state officials will successfully resolve without a significant impact to reserve designations," said Standard & Poor's credit analyst Paul Dyson. "Moreover, in our opinion, the state's level of reserves provides us with credit comfort at the current rating level."
Fiscal 2008 combined reserves, including carry-over and various funds, totaled $590 million, or 11% of expenditures; according to state estimates, combined reserves will decline to $208 million, or 3.9% of expenditures, in fiscal 2009, below the $253 million, or 4.9% of expenditures, forecasted in May 2009. Officials believe various corrective actions including expenditure cuts and revenue enhancements for fiscals 2010 and 2011 should produce ending combined reserve balances closer to 5%-6% of expenditures; however, without such measures, combined reserves could fall to 2%-3% during fiscals 2010 and 2011, and negative by fiscal 2012.
The state constitution requires that the governor and legislature begin to provide tax refunds or credits if the general fund balance exceeds 5% of expenditures for two consecutive years; however, it does not require that refunds or credits immediately lower fund balances to the 5% target, permitting the legislature to retain balances above these levels in recent years. The legislature has faced the situation in the past several fiscal years, which has led to increased appropriation of existing carry-over fund balances for one-time and recurring use. We believe the likely result will be a decrease in the current budgeted and GAAP general fund balance relative to fiscals 2006 through 2008, with an increase most likely dependent on a faster or more robust economic recovery. In our opinion, further significant expenditure reductions will be difficult, but we also recognize that the state and governor have been willing to make them in the past.
After sustained economic expansion between 2003 and 2007, when many sectors performed at record levels, Hawaii's (population 1.3 million) economic trends decelerated and, in many cases, turned negative in 2008 and 2009. However, unlike many markets, the Hawaii housing market experienced only a moderate housing decline: Median home prices as of July 2009 were down just 10% from 2006 levels and only 2.3% of loans went into foreclosure over the last 18 months, ranking it eighth best in the nation. Hawaii's nominal personal income is more stable, and actually increased more than the U.S.' in both 2008 and the first quarter of 2009. The state's median household income was what we consider a strong 121% of the national average as of 2008.
The report is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to research_request@standardandpoors.com. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.
Wednesday, December 16, 2009
Tuesday, December 15, 2009
Six Asian Economies Announce Tariff Reductions and Broader Cooperation
Six Asian Economies Announce Tariff Reductions and Broader Cooperation
Agreement comes at Asia-Pacific Trade Ministers Meeting in Seoul
Trade ministers of six Asian countries – including China, India and the Republic of Korea, three of the region’s largest economies – today announced further tariff reductions at the conclusion of the third Asia-Pacific Trade Agreement (APTA) ministerial council in Seoul
During the meeting, the accession process for Mongolia to become an APTA member was also formally initiated. Besides China, India and the Republic of Korea, the other current members of APTA are Bangladesh, Lao PDR and Sri Lanka.
APTA is the only regional trade agreement which links East, Southeast and South Asia. It was negotiated under the auspices of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
“The total trade volume of APTA members skyrocketed from a mere 140 million Dollars in 1976 to 3.1 trillion Dollars in 2008” underlined Mr. Hur Kyung-Wook, First Vice Minister of Strategy and Finance of the Government of the Republic of Korea. “The conclusion of the Fourth Round negotiations will help evolve APTA as a truly significant trade agreement in the Asia-Pacific region” he added.
“I am delighted that APTA members have made significant progress in deepening their agreement and are committed to continuing the process of liberalization” said Mr. Shigeru Mochida, Deputy Executive Secretary of ESCAP.
The six APTA members furthermore committed to expanding their cooperation into investment and trade facilitation by signing formal framework agreements in those two areas. A framework agreement on trade in services was also finalized and will be signed in early 2010.
In their declaration, the ministers called for further tariff
liberalization and negotiations into additional areas of cooperation. They also reaffirmed their commitment to expanding membership into “a truly pan-Asia-Pacific Trade Agreement.”
The Seoul meeting was hosted by the First Vice Minister of Strategy and Finance of the Republic of Korea, Hur Kyung-Wook, and was attended by ministers or vice ministers from the six APTA members, as well as by ESCAP Deputy Executive Secretary Shigeru Mochida.
Agreement comes at Asia-Pacific Trade Ministers Meeting in Seoul
Trade ministers of six Asian countries – including China, India and the Republic of Korea, three of the region’s largest economies – today announced further tariff reductions at the conclusion of the third Asia-Pacific Trade Agreement (APTA) ministerial council in Seoul
During the meeting, the accession process for Mongolia to become an APTA member was also formally initiated. Besides China, India and the Republic of Korea, the other current members of APTA are Bangladesh, Lao PDR and Sri Lanka.
APTA is the only regional trade agreement which links East, Southeast and South Asia. It was negotiated under the auspices of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
“The total trade volume of APTA members skyrocketed from a mere 140 million Dollars in 1976 to 3.1 trillion Dollars in 2008” underlined Mr. Hur Kyung-Wook, First Vice Minister of Strategy and Finance of the Government of the Republic of Korea. “The conclusion of the Fourth Round negotiations will help evolve APTA as a truly significant trade agreement in the Asia-Pacific region” he added.
“I am delighted that APTA members have made significant progress in deepening their agreement and are committed to continuing the process of liberalization” said Mr. Shigeru Mochida, Deputy Executive Secretary of ESCAP.
The six APTA members furthermore committed to expanding their cooperation into investment and trade facilitation by signing formal framework agreements in those two areas. A framework agreement on trade in services was also finalized and will be signed in early 2010.
In their declaration, the ministers called for further tariff
liberalization and negotiations into additional areas of cooperation. They also reaffirmed their commitment to expanding membership into “a truly pan-Asia-Pacific Trade Agreement.”
The Seoul meeting was hosted by the First Vice Minister of Strategy and Finance of the Republic of Korea, Hur Kyung-Wook, and was attended by ministers or vice ministers from the six APTA members, as well as by ESCAP Deputy Executive Secretary Shigeru Mochida.
Thursday, December 3, 2009
Father’s Day Lunch + Dinner Buffet Le Meridien Bangkok
Show dad just how special he is by spending Father’s Day on Saturday 5 December 2009 at the hottest new hotel, Le Meridien Bangkok. With something for everyone, choose between the World cuisine Latest Recipe for lunch or the ultra chic Bamboo Chic for dinner.
Latest Recipe Father’s Day on Stage
World Cuisine buffet
12.00 – 2.30 pm
Price 980 THB
Remind your dad to bring his appetite to the Father’s Day on Stage as the variety of dishes is extensive representing the greatest recipes from Le Meridien around the world. On stage will be presented Parma ham slice-to-order, Alder wood Smoked salmon, NZ mussel, Prime Beef Carving, Crisp salads, cured meats and cheeses, curries, sushi and more. Chef s will be in action at their a la minute food stations where dishes like noodles, pizza, and pasta are expertly made-to-order.
Bamboo Tune Father Forever Day
Japanese Chinese Thai temptations
18.00 pm – 01.00 am
Price 1500 THB
Invite your dad to Bamboo Chic and be enthralled by the charm of its modern, exotic atmosphere. Let his taste buds travel to distant lands from sampling Wagyu beef roll with bamboo leaves, wok fried Japanese black pork with pepper sauce, shark fin soup with crab meat, sliced Yellow tail fish with citrus vinaigrette and more. Also available is the Live style ASIATIC BBQ that include for instance foie gras, import oyster, rock lobster, tiger prawn, Unagi and other Asian delicacies
Choose the perfect match for the man you admire the most. Half price for children age from 5 to 12 and with no charge for children under the age of 5. For more information or reservations, please call Tel: 02 232 8888 or e-mail: fbadmin.LMBKK@lemeridien.com (Price subjects to service charge and government tax)
Latest Recipe Father’s Day on Stage
World Cuisine buffet
12.00 – 2.30 pm
Price 980 THB
Remind your dad to bring his appetite to the Father’s Day on Stage as the variety of dishes is extensive representing the greatest recipes from Le Meridien around the world. On stage will be presented Parma ham slice-to-order, Alder wood Smoked salmon, NZ mussel, Prime Beef Carving, Crisp salads, cured meats and cheeses, curries, sushi and more. Chef s will be in action at their a la minute food stations where dishes like noodles, pizza, and pasta are expertly made-to-order.
Bamboo Tune Father Forever Day
Japanese Chinese Thai temptations
18.00 pm – 01.00 am
Price 1500 THB
Invite your dad to Bamboo Chic and be enthralled by the charm of its modern, exotic atmosphere. Let his taste buds travel to distant lands from sampling Wagyu beef roll with bamboo leaves, wok fried Japanese black pork with pepper sauce, shark fin soup with crab meat, sliced Yellow tail fish with citrus vinaigrette and more. Also available is the Live style ASIATIC BBQ that include for instance foie gras, import oyster, rock lobster, tiger prawn, Unagi and other Asian delicacies
Choose the perfect match for the man you admire the most. Half price for children age from 5 to 12 and with no charge for children under the age of 5. For more information or reservations, please call Tel: 02 232 8888 or e-mail: fbadmin.LMBKK@lemeridien.com (Price subjects to service charge and government tax)
THAI’s Board Ready to Move Forward with Management’s 5 Year Strategic Plan
Thai Airways International Public Company Limited’s Board of Directors and Management led by Mr. Ampon Kittiampon, THAI Chairman of the Board of Directors, and Mr. Piyasvasti Amranand, THAI President, held a workshop on 28 November 2009 to formulate plans to re-establish THAI as a top three airline in Asia and among the five best airlines in the world within two years.
Mr. Piyasvasti Amranand, THAI President, said that the Company’s Management presented a 5 Year Strategic Plan (2010-2014) and the annual budget (2010-2011) to the Board of Directors for which both the Board of Directors and the Management undertook a joint review of the 5 Year Strategic Plan. The Board of Directors agreed in principle to the Strategic Plan, but also made some observations for improvement before submitting the 5 Year Strategic Plan for final Board approval on 18 December 2009. Upon approval of the strategic plan, implementation will commence immediately on its 50th Anniversary (2010) to achieve its goal of TG 100 where THAI will remain a strong and viable airline in its centennial anniversary.
The Strategic Plan emphasizes 3 dimensions: the need to be highly customer oriented, create higher value for customers, and ensuring dynamism. The Strategic Transformation Roadmap to propel the Strategic Plan includes: 1. Strategic Positioning, 2. Building Customer Value, 3. Route Network and Strategy Development, 4. Product Strategy, 5. Pricing, Revenue Management and Distribution Channels, 6. Business Strategy for THAI Business Units, 7. Cost Efficiency and Productivity, 8. Organizational Effectiveness, 9. Financial Strength.
Focus is placed on achieving the highest level of customer satisfaction within 2 years with the plan to refurbish seats and entertainment systems within existing aircraft along with providing improved customer experience at every touchpoint from ticketing, ground services, inflight services until the customer leaves the airport.
To achieve the above goal, the Company’s Board of Directors approved the refurbishment of 12 Boeing 747 aircraft that are utilized primarily on flights to Europe that are high revenue-making routes. Refurbishment will take two years for completion for all 12 aircraft. In the meantime, other service enhancement strategies will need to be immediately put in place, such as improvement to inflight menus, ensuring service standard and consistency at all customer touchpoints.
For 2010, the established targets include achieving revenues of 193,000 million THB, a 20.7 percent increase over 2009. Profit before interest, tax and foreign currency exchange (EBIT) gain/loss is expected to be approximately 4,300 million THB, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) is targeted at approximately 32,000 million THB. Available seat kilometer (ASK) is set for a 10.7 percent increase to 80,000 million for production, revenue passenger kilometer (RPK) is set at 59,000 million, a 13.2 percent increase over 2009. Target average cabin factor for 2010 is 74 percent along with a 11.4 percent increase in freight production (ADTK) and a 14 percent increase in freight revenue over 2009 to 4,400 million ton kilometers (ADTK) and 2,200 million ton kilometers (RFTK), respectively.
Changes will be implemented in 2010 and beyond to strengthen its internal operations and enhancing its competitiveness in 2011. For 2012 and beyond, the solid operating and financial base will enable THAI to again grow and expand with sustainability towards achieving TG 100.
Mr. Piyasvasti Amranand, THAI President, said that the Company’s Management presented a 5 Year Strategic Plan (2010-2014) and the annual budget (2010-2011) to the Board of Directors for which both the Board of Directors and the Management undertook a joint review of the 5 Year Strategic Plan. The Board of Directors agreed in principle to the Strategic Plan, but also made some observations for improvement before submitting the 5 Year Strategic Plan for final Board approval on 18 December 2009. Upon approval of the strategic plan, implementation will commence immediately on its 50th Anniversary (2010) to achieve its goal of TG 100 where THAI will remain a strong and viable airline in its centennial anniversary.
The Strategic Plan emphasizes 3 dimensions: the need to be highly customer oriented, create higher value for customers, and ensuring dynamism. The Strategic Transformation Roadmap to propel the Strategic Plan includes: 1. Strategic Positioning, 2. Building Customer Value, 3. Route Network and Strategy Development, 4. Product Strategy, 5. Pricing, Revenue Management and Distribution Channels, 6. Business Strategy for THAI Business Units, 7. Cost Efficiency and Productivity, 8. Organizational Effectiveness, 9. Financial Strength.
Focus is placed on achieving the highest level of customer satisfaction within 2 years with the plan to refurbish seats and entertainment systems within existing aircraft along with providing improved customer experience at every touchpoint from ticketing, ground services, inflight services until the customer leaves the airport.
To achieve the above goal, the Company’s Board of Directors approved the refurbishment of 12 Boeing 747 aircraft that are utilized primarily on flights to Europe that are high revenue-making routes. Refurbishment will take two years for completion for all 12 aircraft. In the meantime, other service enhancement strategies will need to be immediately put in place, such as improvement to inflight menus, ensuring service standard and consistency at all customer touchpoints.
For 2010, the established targets include achieving revenues of 193,000 million THB, a 20.7 percent increase over 2009. Profit before interest, tax and foreign currency exchange (EBIT) gain/loss is expected to be approximately 4,300 million THB, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) is targeted at approximately 32,000 million THB. Available seat kilometer (ASK) is set for a 10.7 percent increase to 80,000 million for production, revenue passenger kilometer (RPK) is set at 59,000 million, a 13.2 percent increase over 2009. Target average cabin factor for 2010 is 74 percent along with a 11.4 percent increase in freight production (ADTK) and a 14 percent increase in freight revenue over 2009 to 4,400 million ton kilometers (ADTK) and 2,200 million ton kilometers (RFTK), respectively.
Changes will be implemented in 2010 and beyond to strengthen its internal operations and enhancing its competitiveness in 2011. For 2012 and beyond, the solid operating and financial base will enable THAI to again grow and expand with sustainability towards achieving TG 100.
KTC and Land & House present nifty credit card campaign with KTC Forever Rewards points for L&H house plus 150 times of point value.
KTC and Land & House jointly launch the new campaign, “KTC Forever Rewards points for L&H house”. For the first time in the Thai credit card industry, members can use their points as discount toward the purchase of a house in over 40 Land & House development projects, with 150 times of point value from now until December 31st, 2009.
Woravut Nisapakulthorn, Executive Vice President - Credit Card Business, “KTC” or Krungthai Card Public Company Limited, said “KTC is launching a special promotion with the collaboration of Land & House Public Company Limited. “KTC Forever Rewards points for L&H house” embodies the unique qualities of KTC Forever Rewards points: value, convenience and practicality. The campaign will allow KTC members to use their points as discount toward the purchase of a house in over 40 Land & House projects including detached house, town home and condominium from now until December 31st, 2009.”
“KTC members can simply use 2,500 points or more to redeem for the discount to purchase any Land & House project, provided that it costs 3 Million Baht or less. The value of KTC Forever Rewards points has also gone up 150 times for all members. With 2,500 points, members will be entitled to 25,000 Baht discount or 100 times of the regular point value of only 250 Baht. More importantly, members will earn 50 times of the points used to purchase the house. If members use 2,500 points in the purchase, KTC will grant 125,000 extra points in return. Normally members would have to spend 3,125,000 Baht in order to get this many points.”
Woravut Nisapakulthorn, Executive Vice President - Credit Card Business, “KTC” or Krungthai Card Public Company Limited, said “KTC is launching a special promotion with the collaboration of Land & House Public Company Limited. “KTC Forever Rewards points for L&H house” embodies the unique qualities of KTC Forever Rewards points: value, convenience and practicality. The campaign will allow KTC members to use their points as discount toward the purchase of a house in over 40 Land & House projects including detached house, town home and condominium from now until December 31st, 2009.”
“KTC members can simply use 2,500 points or more to redeem for the discount to purchase any Land & House project, provided that it costs 3 Million Baht or less. The value of KTC Forever Rewards points has also gone up 150 times for all members. With 2,500 points, members will be entitled to 25,000 Baht discount or 100 times of the regular point value of only 250 Baht. More importantly, members will earn 50 times of the points used to purchase the house. If members use 2,500 points in the purchase, KTC will grant 125,000 extra points in return. Normally members would have to spend 3,125,000 Baht in order to get this many points.”
Saturday, November 21, 2009
Customers Rush for Tax Savings with “TMB Money Rush Gold Rush” “Receive up to 7,000 Baht in cash back
TMB launches a special promotion to welcome this year Tax Saving Season with an exciting theme “TMB Money Rush Gold Rush” that offers 350 Baht cash back for every 50,000 Baht investment in the RMF/LTF funds with a maximum cash back of 7,000 Baht as well as gold chain worth 2,000 Baht for every 50,000 Baht premium subscription of TMB Smart Life 15/8 life insurance policy with a maximum 40,000 Baht worth of gold. Customers can enjoy these special offers without having to enter into a prize draw. Offers begin October 19 to December 30, 2009.
Mrs.Kanchana Rojvatunyu, Executive Vice President, Head of Retail Marketing Group, TMB Bank Public Company Limited or TMB says, “The tax saving season for 2009 is approaching and working individuals begin to look for alternative means to help them save on tax such as investing in Retirement Mutual Funds (RMF) and Long Term Equity Funds (LTF) or other investment products in the form of saving through life insurance. Therefore, TMB is launching an attractive promotion offer that is simple, raffle-free and catered to the needs of our clients under the concept ‘TMB Money Rush Gold Rush.’ The promotion allows clients not only to enjoy tax saving benefit, but also good return on the investment and a privilege to earn cash back or gold chain.”
Mr. Jumpol Saimala, Executive Vice President - Head of Wealth Management of TMB adds, “TMB Money Rush Gold Rush is a specific promotion designed to reward clients who choose to invest in TMB RMF/LTF funds of TMBAM and/or ING Funds through TMB branches. For every 50,000 Baht investment, clients will receive 350 Baht cash back and are eligible up to 500,000 Baht investment per fund. The cash back money will be deposited into clients’ TMB savings or current account within 90 days after December 30, 2009 (ending date of the promotion).”
“Moreover, clients may choose to maximize their tax saving benefits by subscribing for TMB Smart Life 15/8, a 15-year life insurance coverage policy with only an 8-year premium payment and a return of up to 190%. Clients will receive a gold chain worth 2,000 Baht for every 50,000 Baht net initial premium payment with a maximum premium payment 1 million Baht per policy. Clients can collect gold chain(s) at TMB branch where they have purchased TMB Smart Life 15/8 from March 15, 2010 onwards.
Mrs.Kanchana concludes, “TMB always strives to create promotional offers to support our financial products that are attractive to various needs of our clients. Hence, TMB believes that both cash back and gold chain offers address these needs of our clients especially during this time. More importantly, this campaign encourages our clients to invest and save for their future financial security as well as for their families through growing returns. Simultaneously, they will enjoy tax saving which eventually, becomes an additional source of income.”
All privileges mentioned above are offered to TMB clients nationwide from October 19 to December 30, 2009. Interested client can inquire further information and a prospectus guidebook at any TMB branch, call TMB Phone Banking 1558 or visit www.tmbbank.com.
Mrs.Kanchana Rojvatunyu, Executive Vice President, Head of Retail Marketing Group, TMB Bank Public Company Limited or TMB says, “The tax saving season for 2009 is approaching and working individuals begin to look for alternative means to help them save on tax such as investing in Retirement Mutual Funds (RMF) and Long Term Equity Funds (LTF) or other investment products in the form of saving through life insurance. Therefore, TMB is launching an attractive promotion offer that is simple, raffle-free and catered to the needs of our clients under the concept ‘TMB Money Rush Gold Rush.’ The promotion allows clients not only to enjoy tax saving benefit, but also good return on the investment and a privilege to earn cash back or gold chain.”
Mr. Jumpol Saimala, Executive Vice President - Head of Wealth Management of TMB adds, “TMB Money Rush Gold Rush is a specific promotion designed to reward clients who choose to invest in TMB RMF/LTF funds of TMBAM and/or ING Funds through TMB branches. For every 50,000 Baht investment, clients will receive 350 Baht cash back and are eligible up to 500,000 Baht investment per fund. The cash back money will be deposited into clients’ TMB savings or current account within 90 days after December 30, 2009 (ending date of the promotion).”
“Moreover, clients may choose to maximize their tax saving benefits by subscribing for TMB Smart Life 15/8, a 15-year life insurance coverage policy with only an 8-year premium payment and a return of up to 190%. Clients will receive a gold chain worth 2,000 Baht for every 50,000 Baht net initial premium payment with a maximum premium payment 1 million Baht per policy. Clients can collect gold chain(s) at TMB branch where they have purchased TMB Smart Life 15/8 from March 15, 2010 onwards.
Mrs.Kanchana concludes, “TMB always strives to create promotional offers to support our financial products that are attractive to various needs of our clients. Hence, TMB believes that both cash back and gold chain offers address these needs of our clients especially during this time. More importantly, this campaign encourages our clients to invest and save for their future financial security as well as for their families through growing returns. Simultaneously, they will enjoy tax saving which eventually, becomes an additional source of income.”
All privileges mentioned above are offered to TMB clients nationwide from October 19 to December 30, 2009. Interested client can inquire further information and a prospectus guidebook at any TMB branch, call TMB Phone Banking 1558 or visit www.tmbbank.com.
Friday, November 13, 2009
TAX BREAKS A BOON FOR ECO CARMAKERS
Tax breaks and subsidies on the purchase of eco-friendly cars after scrapping old vehicles are boosting sales of not only hybrids cars but also fuel-efficient petrol driven models.
Due to the impact of the tax break in promoting the sales of new cars, auto-makers have been working to improve the fuel efficiency of their petrol vehicles to ensure they qualify for the tax-reduction scheme.
In August, Toyota Motor improved the fuel efficiency of some models of its Vitz subcompact car. As a result, it qualified for a purchase and weight tax reduction of 75 per cent, up from the 50 per cent it could previously claim.
Sales of Vitz climbed steeply to 12,731 in September, a 27.7-per-cent rise on the same month last year.
Tax breaks for eco-friendly cars were introduced in April, with a spring 2012 time limit set for the scheme.
Under the scheme, consumers who buy new electric, hybrid and clean diesel cars are exempted from automobile acquisition and weight taxes. But petrol-fuelled car buyers also are entitled to a 50 per cent to 75 per cent tax reduction on cars that meet certain fuel efficiency and emissions criteria.
When a car owner scraps a vehicle that was first registered more than 13 years ago and purchases an eco-friendly car that meets certain criteria, he or she receives a subsidy of 250,000 yen (Bt92,730) if scrapping a family car, including a midsize and subcompact car, and a subsidy of Yen125,000 if scrapping a microcar. The subsidy scheme is set to expire on March 31.
Some Vitz models do not qualify for the tax-reduction scheme. However, for the models that qualify for a 50 per cent or 75 per cent tax reduction, car buyers can save between Yen59,900 and Yen90,000 in acquisition and weight taxes. It gives consumers an incentive to choose certain Vitz models rather than other petrol engined cars that do not qualify for the tax break.
Due to the impact of the tax break in promoting the sales of new cars, auto-makers have been working to improve the fuel efficiency of their petrol vehicles to ensure they qualify for the tax-reduction scheme.
In August, Toyota Motor improved the fuel efficiency of some models of its Vitz subcompact car. As a result, it qualified for a purchase and weight tax reduction of 75 per cent, up from the 50 per cent it could previously claim.
Sales of Vitz climbed steeply to 12,731 in September, a 27.7-per-cent rise on the same month last year.
Tax breaks for eco-friendly cars were introduced in April, with a spring 2012 time limit set for the scheme.
Under the scheme, consumers who buy new electric, hybrid and clean diesel cars are exempted from automobile acquisition and weight taxes. But petrol-fuelled car buyers also are entitled to a 50 per cent to 75 per cent tax reduction on cars that meet certain fuel efficiency and emissions criteria.
When a car owner scraps a vehicle that was first registered more than 13 years ago and purchases an eco-friendly car that meets certain criteria, he or she receives a subsidy of 250,000 yen (Bt92,730) if scrapping a family car, including a midsize and subcompact car, and a subsidy of Yen125,000 if scrapping a microcar. The subsidy scheme is set to expire on March 31.
Some Vitz models do not qualify for the tax-reduction scheme. However, for the models that qualify for a 50 per cent or 75 per cent tax reduction, car buyers can save between Yen59,900 and Yen90,000 in acquisition and weight taxes. It gives consumers an incentive to choose certain Vitz models rather than other petrol engined cars that do not qualify for the tax break.
Sunday, November 8, 2009
OPTIONS WHEN ONE PAYMENT IS TAXABLE TWICE
Many of you may think that today's topic, as suggested by the headline, is a little nonsensical. After all, one payment should never be deemed as taxable income to two separate entities at the same time, should it? Only when it occurs to your organisation will you realise that it is not a joke at all.
If you are not familiar with the franchise agreement framework, you will need to understand the relationship as well as the roles of the franchisor and the franchisee. In brief, an owner of intellectual property rights, a franchisor, will grant a licence to use trademark or trade name, whether registered or unregistered, as well as technique for the production or for the operation of the franchised business, to a franchisee for a certain period of time in exchange for the franchise fees. The franchise fee structure is often divided into an initial franchise fee that is charged at a fixed amount; and a variable fee that is tied to the gross sales revenue of the franchised business.
What is the reason behind this fee structure? The combination between the initial fee and the variable fee is not really groundless, as it is structured to help the franchisee not to incur too large a financial burden at the beginning stage when the business has not yet generated much revenue. In many circumstances, the trademark or service mark is also brand new to consumers in the local market.
To allow the franchised business to grow together with the brand, the initial franchise fee tends to be fixed at a low rate, which means that the franchisor will first contribute intellectual property rights. Certainly, the franchisor, in return, expects higher profits via the variable franchise fee from the growth of the business. This is a typical sharing scheme whereby the franchisor will contribute intellectual property rights and the franchisee will invest the costs and efforts in the local market.
The key that most franchisors expect from franchisees is the effort in marketing and promotional activities in the permitted jurisdiction (e.g. Thailand). If the franchisee does not do marketing activities actively or does not put in sufficient effort, the franchisor can hardly expect good sales volume. In the absence of good sales volume, the variable franchise fee would be marginal.
Thus, it is not a surprise to see the franchisor require the franchisee to incur an amount of marketing expenses in each year, e.g. advertisements on TV, radio, newspapers and magazines. Although the franchisee has the liberty to engage any agencies and freely negotiate advertising fees with agencies or the media, as the intellectual property rights are the property of the franchisor, it is normal that the franchisor will maintain a "control" on such advertisements to ensure that the franchisee will not do anything that may harm the brand image.
At this stage, the franchisor does not directly enjoy any monetary value from the betterment of trademark or trade names at the moment that the franchisee incurs such marketing expenditures. Only when the sales volume goes up will the franchisor receive the higher amount of the variable fee from the franchisee. Thus, no matter how much money the franchisee spends on advertising, if the sales volume is going nowhere, the franchisor won't make money.
In the tax arena, the fees paid by a Thai franchisee to an offshore franchisor, whether a fixed amount or a variable percentage, are always subject to 15% withholding tax. Also, upon payment of the fees, the franchisee will have to remit VAT which is currently imposed at the rate of 7%, to the tax authorities. While this tax liability sounds usual, the Large Taxpayers Office has challenged several franchisees on the grounds that the marketing expenses paid by them to advertising agencies (e.g. advertising agencies, TV, newspapers, media, etc) must be deemed as disguised franchise fees that have to be includable in the tax base.
As the marketing expenses help to publicise the trademark or trade name of the franchisor, and the franchisee is obligated to spend certain amounts in each year and under strict supervision of the franchisor, it can be deemed that the franchisor immediately obtains the monetary benefits in the form of higher value for its brand. Hence, marketing expenses the franchisee paid to agencies are also deemed as royalties subject to withholding tax and VAT.
Now things start to get really interesting from a tax perspective. In two weeks we'll follow up with an explanation of the caveats related to this issue.
If you are not familiar with the franchise agreement framework, you will need to understand the relationship as well as the roles of the franchisor and the franchisee. In brief, an owner of intellectual property rights, a franchisor, will grant a licence to use trademark or trade name, whether registered or unregistered, as well as technique for the production or for the operation of the franchised business, to a franchisee for a certain period of time in exchange for the franchise fees. The franchise fee structure is often divided into an initial franchise fee that is charged at a fixed amount; and a variable fee that is tied to the gross sales revenue of the franchised business.
What is the reason behind this fee structure? The combination between the initial fee and the variable fee is not really groundless, as it is structured to help the franchisee not to incur too large a financial burden at the beginning stage when the business has not yet generated much revenue. In many circumstances, the trademark or service mark is also brand new to consumers in the local market.
To allow the franchised business to grow together with the brand, the initial franchise fee tends to be fixed at a low rate, which means that the franchisor will first contribute intellectual property rights. Certainly, the franchisor, in return, expects higher profits via the variable franchise fee from the growth of the business. This is a typical sharing scheme whereby the franchisor will contribute intellectual property rights and the franchisee will invest the costs and efforts in the local market.
The key that most franchisors expect from franchisees is the effort in marketing and promotional activities in the permitted jurisdiction (e.g. Thailand). If the franchisee does not do marketing activities actively or does not put in sufficient effort, the franchisor can hardly expect good sales volume. In the absence of good sales volume, the variable franchise fee would be marginal.
Thus, it is not a surprise to see the franchisor require the franchisee to incur an amount of marketing expenses in each year, e.g. advertisements on TV, radio, newspapers and magazines. Although the franchisee has the liberty to engage any agencies and freely negotiate advertising fees with agencies or the media, as the intellectual property rights are the property of the franchisor, it is normal that the franchisor will maintain a "control" on such advertisements to ensure that the franchisee will not do anything that may harm the brand image.
At this stage, the franchisor does not directly enjoy any monetary value from the betterment of trademark or trade names at the moment that the franchisee incurs such marketing expenditures. Only when the sales volume goes up will the franchisor receive the higher amount of the variable fee from the franchisee. Thus, no matter how much money the franchisee spends on advertising, if the sales volume is going nowhere, the franchisor won't make money.
In the tax arena, the fees paid by a Thai franchisee to an offshore franchisor, whether a fixed amount or a variable percentage, are always subject to 15% withholding tax. Also, upon payment of the fees, the franchisee will have to remit VAT which is currently imposed at the rate of 7%, to the tax authorities. While this tax liability sounds usual, the Large Taxpayers Office has challenged several franchisees on the grounds that the marketing expenses paid by them to advertising agencies (e.g. advertising agencies, TV, newspapers, media, etc) must be deemed as disguised franchise fees that have to be includable in the tax base.
As the marketing expenses help to publicise the trademark or trade name of the franchisor, and the franchisee is obligated to spend certain amounts in each year and under strict supervision of the franchisor, it can be deemed that the franchisor immediately obtains the monetary benefits in the form of higher value for its brand. Hence, marketing expenses the franchisee paid to agencies are also deemed as royalties subject to withholding tax and VAT.
Now things start to get really interesting from a tax perspective. In two weeks we'll follow up with an explanation of the caveats related to this issue.
THE PROPOSED NEW PROPERTY TAX
We're going to interrupt our series on family law issues because we've received a number of emails asking us to explain about the proposed real estate tax law, formally known as Land and Building Tax Act BE (the Draft Act) pending before Parliament. The Draft Act was prepared by the Ministry of Finance and has been approved by the Council of State.
On Aug 25 this year Korn Chatikavanij, the Minister of Finance, presented the Draft Act to the cabinet. It will probably be brought before Parliament and voted upon this year, though there is, as yet, no date set for a vote. If approved, the Draft Act will be effective in January 2010. The tax rates mentioned below would be phased in over a five-year period.
The tax rate in the Draft Act for residential property on which there is no commercial activity will be 0.1% of the appraised price. The appraised price, incidentally, always includes a value for improvements such as houses or buildings on land. The existing tax scheme is in practice largely ignored. The changes in the Draft Act will, therefore, place an additional cost upon owning residential property.
The Draft Act contains a new tax of 0.5% of the appraised value for undeveloped land held for future commercial purposes or otherwise, doubling every three years, and increasing to as high as 2.0% if the land is not used over a period of years. This will be phased in. Unlike the taxes now on the books, mentioned below, it is anticipated that the new tax, starting at 0.5%, will be enforced, and may encourage holders of large blocks of land to subdivide and sell off.
The real estate taxes that exist now are inconsistent and do not provide the Thai government with what it considers to be adequate revenue. There are two important bases of taxation at present.
First, there is the Act on House and Land Tax, BE 2475 (AD 1932). This law taxes rental income or assessed rental income on property at 12.5%. Property in which the owner resides is exempt from this, however, and revenues under it overlap with the income tax law. Also, compliance is mainly voluntary and doesn't happen much.
Second, there is the Municipality Tax Act, BE 2508 (AD 1965), which applies taxes based on the Appraisal Price Law, BE 2521-2524. The Appraisal Price Law, however, sets values too low to allow for what the government considers adequate revenues. The Municipality Tax Act therefore encourages what is referred to by some in the government of speculative holding of large blocks of land.
So the Draft Act was proposed in place of existing legislation and the above existing acts will be repealed by its effect.
The yearly ceiling or maximum rates multiplied by the appraised value that will be phased in over five years under the Draft Act will be as follows:
0.5% of land and buildings used for commercial purposes.
0.1% of land and buildings used for residential purposes.
0.05% of land used for agricultural purposes.
As mentioned above, for undeveloped land the Draft Act contains an additional ceiling rate of 0.5% of the appraised value, but this rate will double every three years as long as the property is not used until it reaches 2.0% of the appraised value.
As also discussed above, the yearly tax on residential property will, under the Draft Act, eventually be 0.1% of the assessed price. This may work a hardship on the poor. There is presently talk that there may be a royal decree exempting poor people and their properties from the tax.
On Aug 25 this year Korn Chatikavanij, the Minister of Finance, presented the Draft Act to the cabinet. It will probably be brought before Parliament and voted upon this year, though there is, as yet, no date set for a vote. If approved, the Draft Act will be effective in January 2010. The tax rates mentioned below would be phased in over a five-year period.
The tax rate in the Draft Act for residential property on which there is no commercial activity will be 0.1% of the appraised price. The appraised price, incidentally, always includes a value for improvements such as houses or buildings on land. The existing tax scheme is in practice largely ignored. The changes in the Draft Act will, therefore, place an additional cost upon owning residential property.
The Draft Act contains a new tax of 0.5% of the appraised value for undeveloped land held for future commercial purposes or otherwise, doubling every three years, and increasing to as high as 2.0% if the land is not used over a period of years. This will be phased in. Unlike the taxes now on the books, mentioned below, it is anticipated that the new tax, starting at 0.5%, will be enforced, and may encourage holders of large blocks of land to subdivide and sell off.
The real estate taxes that exist now are inconsistent and do not provide the Thai government with what it considers to be adequate revenue. There are two important bases of taxation at present.
First, there is the Act on House and Land Tax, BE 2475 (AD 1932). This law taxes rental income or assessed rental income on property at 12.5%. Property in which the owner resides is exempt from this, however, and revenues under it overlap with the income tax law. Also, compliance is mainly voluntary and doesn't happen much.
Second, there is the Municipality Tax Act, BE 2508 (AD 1965), which applies taxes based on the Appraisal Price Law, BE 2521-2524. The Appraisal Price Law, however, sets values too low to allow for what the government considers adequate revenues. The Municipality Tax Act therefore encourages what is referred to by some in the government of speculative holding of large blocks of land.
So the Draft Act was proposed in place of existing legislation and the above existing acts will be repealed by its effect.
The yearly ceiling or maximum rates multiplied by the appraised value that will be phased in over five years under the Draft Act will be as follows:
0.5% of land and buildings used for commercial purposes.
0.1% of land and buildings used for residential purposes.
0.05% of land used for agricultural purposes.
As mentioned above, for undeveloped land the Draft Act contains an additional ceiling rate of 0.5% of the appraised value, but this rate will double every three years as long as the property is not used until it reaches 2.0% of the appraised value.
As also discussed above, the yearly tax on residential property will, under the Draft Act, eventually be 0.1% of the assessed price. This may work a hardship on the poor. There is presently talk that there may be a royal decree exempting poor people and their properties from the tax.
Saturday, October 31, 2009
Levelling the landscape
The Land and Property Tax Act is intended to make taxation fairer and increase land utilisation but the new regime will require further revision and greater clarity before becoming effective on Jan 1,2010.
According to the Fiscal Policy Office (FPO), the current property tax system is flawed.
For example, the building and land tax is calculated from annual rents which depends on contracts between tenants and landlords, who often register lower rents than they collect to avoid tax.
The current building and land tax rate is also 12.5% of annual rent - or one-and-a-half-month's rent - which is too high and tempts landlords to avoid paying tax.
For a building used by a landlord for his own commercial purpose or not for rent, the local authority estimates an annual charge.
Meanwhile, the local development tax rate varies according to the value of the land, with higher-priced land being taxed at a lower rate. The tax is calculated from land prices in 1978-81, which are outdated and result in a low tax rate.
Tax is also collected on very few land plots due to exemptions and deductions for land of between 50 square wah and five rai on which owners reside.
"Land taxation under the new act will be fair for everyone. The act will increase the efficiency of land utilisation,"said Jaroonsri Chyehard, director of the Local Tax and Non-tax Policy Division at the Tax Policy Bureau of the FPO.
The tax base will be the total value of land and buildings, including other property adjoining to that land or building,according to the FPO. The tax base will be cut by 1% a year, up to a maximum reduction of 10%, for property maintenance.
Deductions and exemptions will also be given for damage to land and buildings from natural disasters such as floods.Tax exemptions will apply for land and buildings for residential and agricultural use, the value of which must not exceed a legal limit.
The tax base for land without buildings will be calculated from the Treasury De-partment's land appraisals. For land and buildings, the tax base will be calculated from appraised land prices and appraised building prices.
Three tax rates will be introduced: a general rate for land and buildings of not more than 0.5% of the tax base; a residential rate for non-commercial land and building of not more than 0.1%;and an agricultural rate of not more than 0.05%.
Within these limits, local administrations have the authority to set the rate and to add new categories of rate.
On abandoned land, the tax will be charged in the first three years at up to 0.5% of the tax base. But if that land remains unused, from the fourth year onwards the tax rate will double every three years to a maximum of 2% of the tax base.
"This aims to prevent land stockpiling.It will be a measure to encourage landlords with many land plots to rent them out or sell. Land plot prices may become lower," said Ms Jaroonsri.
She suggested landlords start surveying their own assets and consider how to use assets to generate worthwhile returns.
"They [landlords] should seek ways to benefit from the empty plots on which they will pay higher tax than before.They might be used to hold fresh markets or whatever makes them worth the tax."
Three groups who never paid or underpaid Land and Building Tax would be affected by the new act, she said. These are current taxpayers paying less than the rate they should; owners of land plots sized between 50 square wah and five rai, the minimum size for paying tax under the current act; and landlords who push the tax burden onto their tenants.
Tax should be paid by April of each year. Taxpayers may pay by installments set by the ministry but if they fail to pay within the required period, they lose the right to pay by installments and must pay an additional 1% a month of the unpaid amount.
But taxpayers have the right to appeal their rate to the local administration within 30 days.
"There will be a grace period of two years to allow agencies involved to prepare for the new act," she said.
The Lands Department will make a nationwide digital map to match land title deeds and land price appraisals being done by the Treasury Department.So far, the department has appraised only 6 million out of 31 million plots.
At the same time, local administrations will survey lands and buildings in their areas, to establish each taxpayer's lands and buildings and calculate their tax liabilities.
To reduce the burden on those who have never paid Building and Land Tax or Local Development Tax - most of whom are homeowners - the rate will be 50% of the normal rate in the first year,75% in the second year and the full amount from the third year.
Taxpayers who currently pay Building and Land Tax and Local Development Tax will pay a higher rate after the new act comes into effect, the rate will be 75% of the tax in the first year,50% in the second year and the full amount from the third year onward.
"We are concerned about duplications of taxable areas," said Somchao Tanthathoedtham, managing director of the listed developer NC Housing Plc.
"For example, homeowners in a gated development normally pay a common area fee, part of which is used for facilities maintenance. Under the new tax act,they will also pay property tax to local administrative organisations that are not responsible for facilities in their village."
Atip Bijanonda, president of the Thai Condominium Association, said there were likely to be some overlaps between the new tax system and other taxes,which might increase burdens on asset owners.
"The transfer fee should be a fixed rate, not percentage-based," he said.
He added that clarity is needed for tax deduction and tax payment systems,which should have a convenient payment system for taxpayers, especially those owning many plots of land countrywide.
Appraisals of building values by local administrative official should be fair to everyone, he added.
Supalakana Pinitpuvadol, a law professor at Chulalongkorn University, has expressed concern that some terms in the new act - such as "land","building"or "other property"- should be adequately defined for general understanding and clear legislative interpretation.
For instance, regulations that help reduce the tax burden should be clear.Depreciation should be for buildings but not for land - which generally ap-preciates - and maintenance fees should be based on actual payments or an estimation.
The FPO will revise tax structures and examine the duplication of other property taxes such as property transfer fees and special business tax, said Ms Jaroonsri.It will also consider the case of gated housing villages where homeowners are responsible for utilities.
"The Land and Property Tax Act will improve the property ownership tax system, promote decentralising to local administrative organisations, reduce hoarding of land for speculation and generate more income for local administrative organisations."
Last year, local administrations generated an income of 35.22 billion baht but received 193.67 billion baht from the government and a subsidy of 147.84 billion baht.
"With the taxation system under the new act, local administrative organisations' revenue will increase to 90 billion baht from the current 20 billion baht they gain from property-related tax,"she added.
Sopon Pornchokchai, president of the Thai Appraisal Foundation, said revenue would be collected directly for local development under the new act and could be used for utilities and education, which in turn would increase the value of property in that area.
"The more tax a local authority can collect, the more development it will make," he said."It's like the more you give [pay tax], the more you get [higher property value]."
Even a large landlord owning a property worth millions of baht is likely to benefit from higher land value if the taxes he pays fund local development.
"There will be no chance of leakage or corruption by big politicians or government officials as tax collection and spending are within local areas and will not enter the central government's coffers," he said.
According to the Fiscal Policy Office (FPO), the current property tax system is flawed.
For example, the building and land tax is calculated from annual rents which depends on contracts between tenants and landlords, who often register lower rents than they collect to avoid tax.
The current building and land tax rate is also 12.5% of annual rent - or one-and-a-half-month's rent - which is too high and tempts landlords to avoid paying tax.
For a building used by a landlord for his own commercial purpose or not for rent, the local authority estimates an annual charge.
Meanwhile, the local development tax rate varies according to the value of the land, with higher-priced land being taxed at a lower rate. The tax is calculated from land prices in 1978-81, which are outdated and result in a low tax rate.
Tax is also collected on very few land plots due to exemptions and deductions for land of between 50 square wah and five rai on which owners reside.
"Land taxation under the new act will be fair for everyone. The act will increase the efficiency of land utilisation,"said Jaroonsri Chyehard, director of the Local Tax and Non-tax Policy Division at the Tax Policy Bureau of the FPO.
The tax base will be the total value of land and buildings, including other property adjoining to that land or building,according to the FPO. The tax base will be cut by 1% a year, up to a maximum reduction of 10%, for property maintenance.
Deductions and exemptions will also be given for damage to land and buildings from natural disasters such as floods.Tax exemptions will apply for land and buildings for residential and agricultural use, the value of which must not exceed a legal limit.
The tax base for land without buildings will be calculated from the Treasury De-partment's land appraisals. For land and buildings, the tax base will be calculated from appraised land prices and appraised building prices.
Three tax rates will be introduced: a general rate for land and buildings of not more than 0.5% of the tax base; a residential rate for non-commercial land and building of not more than 0.1%;and an agricultural rate of not more than 0.05%.
Within these limits, local administrations have the authority to set the rate and to add new categories of rate.
On abandoned land, the tax will be charged in the first three years at up to 0.5% of the tax base. But if that land remains unused, from the fourth year onwards the tax rate will double every three years to a maximum of 2% of the tax base.
"This aims to prevent land stockpiling.It will be a measure to encourage landlords with many land plots to rent them out or sell. Land plot prices may become lower," said Ms Jaroonsri.
She suggested landlords start surveying their own assets and consider how to use assets to generate worthwhile returns.
"They [landlords] should seek ways to benefit from the empty plots on which they will pay higher tax than before.They might be used to hold fresh markets or whatever makes them worth the tax."
Three groups who never paid or underpaid Land and Building Tax would be affected by the new act, she said. These are current taxpayers paying less than the rate they should; owners of land plots sized between 50 square wah and five rai, the minimum size for paying tax under the current act; and landlords who push the tax burden onto their tenants.
Tax should be paid by April of each year. Taxpayers may pay by installments set by the ministry but if they fail to pay within the required period, they lose the right to pay by installments and must pay an additional 1% a month of the unpaid amount.
But taxpayers have the right to appeal their rate to the local administration within 30 days.
"There will be a grace period of two years to allow agencies involved to prepare for the new act," she said.
The Lands Department will make a nationwide digital map to match land title deeds and land price appraisals being done by the Treasury Department.So far, the department has appraised only 6 million out of 31 million plots.
At the same time, local administrations will survey lands and buildings in their areas, to establish each taxpayer's lands and buildings and calculate their tax liabilities.
To reduce the burden on those who have never paid Building and Land Tax or Local Development Tax - most of whom are homeowners - the rate will be 50% of the normal rate in the first year,75% in the second year and the full amount from the third year.
Taxpayers who currently pay Building and Land Tax and Local Development Tax will pay a higher rate after the new act comes into effect, the rate will be 75% of the tax in the first year,50% in the second year and the full amount from the third year onward.
"We are concerned about duplications of taxable areas," said Somchao Tanthathoedtham, managing director of the listed developer NC Housing Plc.
"For example, homeowners in a gated development normally pay a common area fee, part of which is used for facilities maintenance. Under the new tax act,they will also pay property tax to local administrative organisations that are not responsible for facilities in their village."
Atip Bijanonda, president of the Thai Condominium Association, said there were likely to be some overlaps between the new tax system and other taxes,which might increase burdens on asset owners.
"The transfer fee should be a fixed rate, not percentage-based," he said.
He added that clarity is needed for tax deduction and tax payment systems,which should have a convenient payment system for taxpayers, especially those owning many plots of land countrywide.
Appraisals of building values by local administrative official should be fair to everyone, he added.
Supalakana Pinitpuvadol, a law professor at Chulalongkorn University, has expressed concern that some terms in the new act - such as "land","building"or "other property"- should be adequately defined for general understanding and clear legislative interpretation.
For instance, regulations that help reduce the tax burden should be clear.Depreciation should be for buildings but not for land - which generally ap-preciates - and maintenance fees should be based on actual payments or an estimation.
The FPO will revise tax structures and examine the duplication of other property taxes such as property transfer fees and special business tax, said Ms Jaroonsri.It will also consider the case of gated housing villages where homeowners are responsible for utilities.
"The Land and Property Tax Act will improve the property ownership tax system, promote decentralising to local administrative organisations, reduce hoarding of land for speculation and generate more income for local administrative organisations."
Last year, local administrations generated an income of 35.22 billion baht but received 193.67 billion baht from the government and a subsidy of 147.84 billion baht.
"With the taxation system under the new act, local administrative organisations' revenue will increase to 90 billion baht from the current 20 billion baht they gain from property-related tax,"she added.
Sopon Pornchokchai, president of the Thai Appraisal Foundation, said revenue would be collected directly for local development under the new act and could be used for utilities and education, which in turn would increase the value of property in that area.
"The more tax a local authority can collect, the more development it will make," he said."It's like the more you give [pay tax], the more you get [higher property value]."
Even a large landlord owning a property worth millions of baht is likely to benefit from higher land value if the taxes he pays fund local development.
"There will be no chance of leakage or corruption by big politicians or government officials as tax collection and spending are within local areas and will not enter the central government's coffers," he said.
RBS eyes plans to offload branches
The Royal Bank of Scotland (RBS) is considering a British government-backed plan to sell of more than 300 high street branches to satisfy EU competition authorities, the Financial Times said yesterday.
RBS, which is 70 per cent owned by the taxpayer after it was saved from collapse by a government bail-out last year, told the newspaper it was "working towards a solution with the European Commission".
Officials close to the negotiations said the plan was well advanced. The plan hinges on the EU's concerns that RBS has a 30-per-cent share of the small business banking market in Britian. Brussels wants to see RBS's operations in the sector reduced by 10 per cent.
The Scottish bank could achieve this by disposing of its 312 RBS-branded branches in England and Wales, which mostly serve its one million small corporate customers.
RBS, which is 70 per cent owned by the taxpayer after it was saved from collapse by a government bail-out last year, told the newspaper it was "working towards a solution with the European Commission".
Officials close to the negotiations said the plan was well advanced. The plan hinges on the EU's concerns that RBS has a 30-per-cent share of the small business banking market in Britian. Brussels wants to see RBS's operations in the sector reduced by 10 per cent.
The Scottish bank could achieve this by disposing of its 312 RBS-branded branches in England and Wales, which mostly serve its one million small corporate customers.
CALIFORNIA'S GOVERNOR TO THE RESCUE
Terminator-turned-governor Arnold Schwarzenegger, who has played the hero in many movies, will now try to rescue California from its dire financial straits.
Schwarzenegger will soon seel Build America Bonds to individuals to raise money.
California, suffering from record unmployment and the lowest credit rating of any state, plans to borrow US$4.5 billion (Bt151 billion) this week for schools, parks and hospitals after municipal bond yields fell to a 42-year low.
Bloomberg reports worth of federally subsidised, taxable will sell $3.2 billion worth of federally subsidised, taxable Build America Bonds and $1.3 billion worth of tax-exempt debt, the biggest municipal financing of the week. While yields on 30-year Build America securities that California sold in April fell to 6.68 percent last Thursday, from 7.43 per cent when they were sold, the rate remains 0.53-percent-age-point more than the average US corporate note due in more than 15 years, Bank of America's Merrill Lynch & Co indexes show.
California is reaping the benefits of the highest returns on tax-exempt debt since 2000 even as it projects a deficit of $38 billion over the next three years. Pacific Investment Management's Bill Gross said the state might lack the "discipline" to plug the gap.
"I'm not a strong buyer at these levels," said Ken Naehu, who oversees $2.5 billion in bods as head of fixed income at Bel Air Investment Advisers in Los Angeles.
"Investors should know that the issues and problems with the state's finances have not been resolved."
California's record 12.2-per-cent unemployment rate in August compared with 7.6 per cent in the same period last year and 5.5 per cent two years earlier. The Labour Department last week reported the nation's unemployment rate reached 9.8 per cent last month.
Tax revenue has missed Governor Schwarzenegger's Budget Office projections, falling 1.3 per cent from forecasts when the state legislature approved the present spending plan totalling about $85 billion in July.
California will offer Build America Bonds to individuals today and tomorrow and to institutions on Thursday, said Treasury spokesman Tom Dresslar. The last time it sold long-term securities was April's $6.85 - billion deal.
The state was among the first to sell Build America Bonds, which are taxable securities.
Schwarzenegger will soon seel Build America Bonds to individuals to raise money.
California, suffering from record unmployment and the lowest credit rating of any state, plans to borrow US$4.5 billion (Bt151 billion) this week for schools, parks and hospitals after municipal bond yields fell to a 42-year low.
Bloomberg reports worth of federally subsidised, taxable will sell $3.2 billion worth of federally subsidised, taxable Build America Bonds and $1.3 billion worth of tax-exempt debt, the biggest municipal financing of the week. While yields on 30-year Build America securities that California sold in April fell to 6.68 percent last Thursday, from 7.43 per cent when they were sold, the rate remains 0.53-percent-age-point more than the average US corporate note due in more than 15 years, Bank of America's Merrill Lynch & Co indexes show.
California is reaping the benefits of the highest returns on tax-exempt debt since 2000 even as it projects a deficit of $38 billion over the next three years. Pacific Investment Management's Bill Gross said the state might lack the "discipline" to plug the gap.
"I'm not a strong buyer at these levels," said Ken Naehu, who oversees $2.5 billion in bods as head of fixed income at Bel Air Investment Advisers in Los Angeles.
"Investors should know that the issues and problems with the state's finances have not been resolved."
California's record 12.2-per-cent unemployment rate in August compared with 7.6 per cent in the same period last year and 5.5 per cent two years earlier. The Labour Department last week reported the nation's unemployment rate reached 9.8 per cent last month.
Tax revenue has missed Governor Schwarzenegger's Budget Office projections, falling 1.3 per cent from forecasts when the state legislature approved the present spending plan totalling about $85 billion in July.
California will offer Build America Bonds to individuals today and tomorrow and to institutions on Thursday, said Treasury spokesman Tom Dresslar. The last time it sold long-term securities was April's $6.85 - billion deal.
The state was among the first to sell Build America Bonds, which are taxable securities.
Tuesday, October 20, 2009
PRIVATE SECTOR WANTS RAYONG A SPECIAL ZONE
The private sector today will propose the government turn Rayong province into a special economic zone to improve budget allocation for its industrialised areas, including Map Ta Phut, as well as the payment of an environment tax to assure further industrial development.
The first proposal was agreed upon yesterday by the Joint Privaate Committee on Commerce, Industries and Banking.
At the meeting, Suthi Atchasai, coordinator of a public network on the Eastern Seaboard, which is one of the main forces blocking further industrial development in the province, said there must be a clear definition of what constitutes a special economic zone.
"Every party, including local communities, should be able to participate in the discussion of this issue. Importantly, this proposal must not have a hidden agenda benefiting any single party and must clearly keep in line with the Constitution's Article 67", he said.
PTT Aromatics and Refining president and CEO Chainoi Puankosoom said the proposal would allow non-Rayong residents working in the area to register as provincial citizens. Then more budget would go to the province, improving the standard of living as a whole.
"We believe people today are not so concerned about the polluted environment, but they are worried more about their low standard of living, such as poor management of waste treatment or utilities," he said.
Federation of Thai Industries chairman Santi Vilassakdanont said the proposal would be tabled at the Public-Private Partnership meeting today.
Meanwhile, the private sector will also propose collection of an environment tax to its government counterparts, on condition that the money generated go to the areas where plants are located.
"We want to express that we as concerned about the environment as other parties. We are willing to follow the laws and regulations, as well as set up a Bt17-billion fund to improve the environment from 2007-11," he said.
He said the private sector would reiterate to the government that it fully supported the idea of an "eco-industrial town" as a long-term goal out of concern from local and foreign investors that industrial development in Thailand could be discontinued.
"If this conflict continues, it's a great risk. So far, I have not heard about firms moving their investment to other countries, but it may happen soon," said Japanese Chamber of Commerce vice chairman Fukujiro Yamabe.
He said it was difficult for Japanese companies in Thailand to explain the court's recent injunction against 76 industrial projects to parent companies. Therefore, the government should speed up resolution of the problem, in order to maintain their confidence in running businesses here.
"It will be too long for investors, should this issue be prolonged until next year," he added.
Nandor von der Luehe, chairman of the Joint Foreign Chambers of Commerce in Thailand, said investors fully understood the importance of environmemtal protection. He believes Thailand has good environmental-protection laws that meet world-class tandards and that most of the suspended projects could pass those standards.
Therefore, the government should take the shorted time to move the situation from the current murky state, in order to restore investor confidence.
"We would like to envourage the government to allocate more money to local communities, in order to improve people's quality of life," von der Luehe added.
Notably, the conflict has delayed some refiners' investment plans to improve their oil quality to meet Euro IV emission standards.
The first proposal was agreed upon yesterday by the Joint Privaate Committee on Commerce, Industries and Banking.
At the meeting, Suthi Atchasai, coordinator of a public network on the Eastern Seaboard, which is one of the main forces blocking further industrial development in the province, said there must be a clear definition of what constitutes a special economic zone.
"Every party, including local communities, should be able to participate in the discussion of this issue. Importantly, this proposal must not have a hidden agenda benefiting any single party and must clearly keep in line with the Constitution's Article 67", he said.
PTT Aromatics and Refining president and CEO Chainoi Puankosoom said the proposal would allow non-Rayong residents working in the area to register as provincial citizens. Then more budget would go to the province, improving the standard of living as a whole.
"We believe people today are not so concerned about the polluted environment, but they are worried more about their low standard of living, such as poor management of waste treatment or utilities," he said.
Federation of Thai Industries chairman Santi Vilassakdanont said the proposal would be tabled at the Public-Private Partnership meeting today.
Meanwhile, the private sector will also propose collection of an environment tax to its government counterparts, on condition that the money generated go to the areas where plants are located.
"We want to express that we as concerned about the environment as other parties. We are willing to follow the laws and regulations, as well as set up a Bt17-billion fund to improve the environment from 2007-11," he said.
He said the private sector would reiterate to the government that it fully supported the idea of an "eco-industrial town" as a long-term goal out of concern from local and foreign investors that industrial development in Thailand could be discontinued.
"If this conflict continues, it's a great risk. So far, I have not heard about firms moving their investment to other countries, but it may happen soon," said Japanese Chamber of Commerce vice chairman Fukujiro Yamabe.
He said it was difficult for Japanese companies in Thailand to explain the court's recent injunction against 76 industrial projects to parent companies. Therefore, the government should speed up resolution of the problem, in order to maintain their confidence in running businesses here.
"It will be too long for investors, should this issue be prolonged until next year," he added.
Nandor von der Luehe, chairman of the Joint Foreign Chambers of Commerce in Thailand, said investors fully understood the importance of environmemtal protection. He believes Thailand has good environmental-protection laws that meet world-class tandards and that most of the suspended projects could pass those standards.
Therefore, the government should take the shorted time to move the situation from the current murky state, in order to restore investor confidence.
"We would like to envourage the government to allocate more money to local communities, in order to improve people's quality of life," von der Luehe added.
Notably, the conflict has delayed some refiners' investment plans to improve their oil quality to meet Euro IV emission standards.
Saturday, October 17, 2009
NEW EXCISE CHIEF VOWS WIDESPREAD TAX REFORM
The new head of the Excise Department has pledged to reform liquor, beer, oil and automobile taxes in response to complaints by producers and independent academics of obscure rules and unfair treatment among rivals.
Areepong Bhoochaoom, newly appointed director-general of the Excise Department, yesterday said he would give priority to solving issues related to tax collection on alcohol beverages, oil and cars. A committee has been set up to find solutions within two months, he said.
Beer and liquor producers have long complained that the department has not treated them equally, accusing the department of favour one giant producer resulting in lack of a level playing field.
Nipon Poapongsakorn, president of the Thailand Research Development Institution, an independent think-tank, also previously criticised the department and the Finance Ministry for their "unjust" excise tax system. Nipon currently leads a research team studying the whole structure of excise taxes.
Some experts also suggested the tax rate should be based on alcohol content rather price.
Areepong said the department might change the way its calculated car taxes from a rate based on factory prices to retail prices.
The department may also require softdrink manufacturers and oil traders to provide online information in the same way that alcohol producers send online information about their production to the department.
The department will make clear rules as to who must pay nightclub services tax, he pledged.
It will also launch a tax reform master plan this year, Areepong said.
The reform will aim to make taxes simple and justice and will not cause multinational firms to relocate their factories out of Thailand, he said.
In the short run, the department will not increase tax rates, but will improve tax collection efficiency, he added.
The agency plans to collect excise tax worth Bt291 billion for the current fiscal year (October 2009 to September 2010).
Areepong wants to beat the target by Bt20 to Bt30 billion.
The department is under pressure to collect more taxes as most tariffs under the Asean free trade agreement will be cut to zero next year.
Areepong Bhoochaoom, newly appointed director-general of the Excise Department, yesterday said he would give priority to solving issues related to tax collection on alcohol beverages, oil and cars. A committee has been set up to find solutions within two months, he said.
Beer and liquor producers have long complained that the department has not treated them equally, accusing the department of favour one giant producer resulting in lack of a level playing field.
Nipon Poapongsakorn, president of the Thailand Research Development Institution, an independent think-tank, also previously criticised the department and the Finance Ministry for their "unjust" excise tax system. Nipon currently leads a research team studying the whole structure of excise taxes.
Some experts also suggested the tax rate should be based on alcohol content rather price.
Areepong said the department might change the way its calculated car taxes from a rate based on factory prices to retail prices.
The department may also require softdrink manufacturers and oil traders to provide online information in the same way that alcohol producers send online information about their production to the department.
The department will make clear rules as to who must pay nightclub services tax, he pledged.
It will also launch a tax reform master plan this year, Areepong said.
The reform will aim to make taxes simple and justice and will not cause multinational firms to relocate their factories out of Thailand, he said.
In the short run, the department will not increase tax rates, but will improve tax collection efficiency, he added.
The agency plans to collect excise tax worth Bt291 billion for the current fiscal year (October 2009 to September 2010).
Areepong wants to beat the target by Bt20 to Bt30 billion.
The department is under pressure to collect more taxes as most tariffs under the Asean free trade agreement will be cut to zero next year.
Tuesday, October 13, 2009
BOT URGED TO FACILITATE MONEY FLOW FOR MULTINATIONALS
The Finance Ministry will ask the Bank of Thailand (BOT) to loosen regulations for multinational firms to enable them to bring money into the country or repatriate it in a bid to promote the country as their regional headquarters.
Deputy Finance Minister Pradit Phataraprasit said that he would consult with the central bank later.
Winai Wittawatkaravet, directorgeneral of the Revenue Department, said the department would not offer more tax incentives but would relax tax regulations for large firms.
Earlier, the ministry had cut corporate income tax to 10 per cent from the regular 30 per cent for companies establishing regional operating headquarters in Thailand.
Finance Minister Korn Chatikavanij yesterday said he will today submit to the Cabinet a proposal to cut the excise tax rate on Thai traditional spas to zero from 10 per cent.
"I believe the Cabinet will agree to support the tourism industry," he said. Currently the Excise Department collects tax from about 1,000 spa operators but tax collection is less than Bt1 billion annually, said Korn.
The spa business has long been asking for a tax cut. Spa businesses operating in hospitals or temples would benefit from the rate reduction.
However, massage parlours will still be taxed 10 per cent, said Korn.
Meanwhile, Winai said his department will keep a close eye on construction companies to prevent them from dodging tax.
He warned that those who evade tax would be punished and accounting firms that help them to avoid tax payment would also be penalised.
He said the department had found that some accounting firms had helped some construction firms to evade tax by making a false report report on expenditures due to the cost of oil.
"We will not just look at receipts but we will dig into the reasonable cost of oil in the construction businesses," he said.
Finance Minister Korn Chatikavanij yesterday said he will today submit to the Cabinet a proposal to cut the excise tax rate on Thai traditional spas to zero from 10 per cent.
Deputy Finance Minister Pradit Phataraprasit said that he would consult with the central bank later.
Winai Wittawatkaravet, directorgeneral of the Revenue Department, said the department would not offer more tax incentives but would relax tax regulations for large firms.
Earlier, the ministry had cut corporate income tax to 10 per cent from the regular 30 per cent for companies establishing regional operating headquarters in Thailand.
Finance Minister Korn Chatikavanij yesterday said he will today submit to the Cabinet a proposal to cut the excise tax rate on Thai traditional spas to zero from 10 per cent.
"I believe the Cabinet will agree to support the tourism industry," he said. Currently the Excise Department collects tax from about 1,000 spa operators but tax collection is less than Bt1 billion annually, said Korn.
The spa business has long been asking for a tax cut. Spa businesses operating in hospitals or temples would benefit from the rate reduction.
However, massage parlours will still be taxed 10 per cent, said Korn.
Meanwhile, Winai said his department will keep a close eye on construction companies to prevent them from dodging tax.
He warned that those who evade tax would be punished and accounting firms that help them to avoid tax payment would also be penalised.
He said the department had found that some accounting firms had helped some construction firms to evade tax by making a false report report on expenditures due to the cost of oil.
"We will not just look at receipts but we will dig into the reasonable cost of oil in the construction businesses," he said.
Finance Minister Korn Chatikavanij yesterday said he will today submit to the Cabinet a proposal to cut the excise tax rate on Thai traditional spas to zero from 10 per cent.
Monday, October 12, 2009
Alcohol tax revamp urged
Excise taxes for alcoholic beverages should be overhauled to be strictly based on alcoholic content, according to Satit Rungkasiri, director-general of the Fiscal Policy Office.
Shifting tax calculations to be based on degree rather than quantity is in keeping with the idea that beverages with higher alcoholic content should pay higher tax, considering the higher potential cost to public health and society.
Mr Satit also said Thailand was unique in charging excise taxes for beers based on a three-category system: premium,standard and economy."No other country uses the system we use for beers. It only introduces complications in calculating taxes."
But past efforts to overhaul the tax structure for beer, wine, liquors and spirits have mostly failed, in part to heavy lobbying by domestic producers.
Excise taxes for beer are currently calculated as 55% of the ex-factory price or 100 baht per litre-equivalent of 100%alcohol, whichever is higher. In general,charging based on alcoholic content will bring the government more money.
The three-category structure is complicated as each has its own reference for ex-factory prices, with economy the lowest and premium the highest. This is despite the fact that production costs for beer differ relatively little.
Past efforts to link tax rates to alcohol content have also been impeded by government policies to assist community producers of white spirits, which generally have more alcohol than imports.
Shifting tax calculations to be based on degree rather than quantity is in keeping with the idea that beverages with higher alcoholic content should pay higher tax, considering the higher potential cost to public health and society.
Mr Satit also said Thailand was unique in charging excise taxes for beers based on a three-category system: premium,standard and economy."No other country uses the system we use for beers. It only introduces complications in calculating taxes."
But past efforts to overhaul the tax structure for beer, wine, liquors and spirits have mostly failed, in part to heavy lobbying by domestic producers.
Excise taxes for beer are currently calculated as 55% of the ex-factory price or 100 baht per litre-equivalent of 100%alcohol, whichever is higher. In general,charging based on alcoholic content will bring the government more money.
The three-category structure is complicated as each has its own reference for ex-factory prices, with economy the lowest and premium the highest. This is despite the fact that production costs for beer differ relatively little.
Past efforts to link tax rates to alcohol content have also been impeded by government policies to assist community producers of white spirits, which generally have more alcohol than imports.
Sunday, October 11, 2009
TAX INCENTIVES MULLED FOR FOREIGN EXPERTS
The Finance Ministry is considering whether to offer tax incentives to attract foreign specialists to work in Thailand, as part of an attempt to promote value-added industries and services.
In order to promote financialmarket development, tax incentives will be also given to banks and insurance firms that merge.
Satit Rungkasiri, newly appointed director-general of the Fiscal Policy Office, yesterday said he had assigned tax officials to identify incentives to lure highly skilled foreign workers to create know-how in the Kingdom.
This is one of several tasks he outlined as the new head of the office.
"If we can invite 10,000 specialists from abroad, they may be able to make a [more] significant contribution to the economy than a million low-skilled labourers imported from neighbouring countries," said Satit.
He said the office would work with other government agencies such as the Interior Ministry and Foreign Ministry to facilitate such an initiative.
Foreign workers often complain about the difficulty of obtaining work permits, he added.
MERGERS AND ACQUISITIONS
Tax incentives will cover research and development activities by both local citiznes and foreigners, he said.
The Finance Ministry is considering tax incentives for mergers and acquisitions among insurance firms and banks, as part of capital-market development, he said.
M&A activity currently faces a tax disincetive, in that the reserves of a bank or insurance firm are counted as income and the new post-M&A entity to pay tax on this amount.
The ministry is planning to eliminate this problem, he said.
It will also consolidate fiscal policies by creating a new body chaired by the finance minister to oversee local and central government expenditures, revenues, activities of off-budget funds as well as public-private partnership spending.
The move is aimed at creating greater transparency and prudence in the fical system. The fiscal bill will soon be submitted to the Cabinet for approval, Satit said.
In addition, Finance Minister Korn Chatikavanij has reportedly signed the draft law on the establishment of a national pension fund, which has been listed for Cabinet consideration.
In order to promote financialmarket development, tax incentives will be also given to banks and insurance firms that merge.
Satit Rungkasiri, newly appointed director-general of the Fiscal Policy Office, yesterday said he had assigned tax officials to identify incentives to lure highly skilled foreign workers to create know-how in the Kingdom.
This is one of several tasks he outlined as the new head of the office.
"If we can invite 10,000 specialists from abroad, they may be able to make a [more] significant contribution to the economy than a million low-skilled labourers imported from neighbouring countries," said Satit.
He said the office would work with other government agencies such as the Interior Ministry and Foreign Ministry to facilitate such an initiative.
Foreign workers often complain about the difficulty of obtaining work permits, he added.
MERGERS AND ACQUISITIONS
Tax incentives will cover research and development activities by both local citiznes and foreigners, he said.
The Finance Ministry is considering tax incentives for mergers and acquisitions among insurance firms and banks, as part of capital-market development, he said.
M&A activity currently faces a tax disincetive, in that the reserves of a bank or insurance firm are counted as income and the new post-M&A entity to pay tax on this amount.
The ministry is planning to eliminate this problem, he said.
It will also consolidate fiscal policies by creating a new body chaired by the finance minister to oversee local and central government expenditures, revenues, activities of off-budget funds as well as public-private partnership spending.
The move is aimed at creating greater transparency and prudence in the fical system. The fiscal bill will soon be submitted to the Cabinet for approval, Satit said.
In addition, Finance Minister Korn Chatikavanij has reportedly signed the draft law on the establishment of a national pension fund, which has been listed for Cabinet consideration.
Friday, September 25, 2009
LGT faces lawsuit from German tax evader
A German tax evader is suing the Liechtenstein bank LGT, claiming the institution failed to inform him that his supposedly confidential financial data was in the hands of the authorities.
The Liechtenstein Regional Court confirmed yesterday a report in Financial Times Deutschland that the civil proceedings would be heard next in Vaduz,the capital of the Alpine principality.
The real estate developer wants 13 million in damages, claiming the bank should have told him the German government had incriminating information against him. He said that had he known of the impending proceedings against him, he would have come clean to the tax authorities and avoided penalties.
The man, aged 66 at the time, was given a suspended prison sentence and a fine of 7.5 million for tax evasion.In 2008, Germany's intelligence services purchased a computer disk from a former LGT employee, which contained confidential data on hundreds of clients of several nationalities, many of whom were evading taxes.
Liechtenstein has strict banking confidentiality rules, though these are in the process of being relaxed owing to international pressure against so-called tax havens.
The Liechtenstein Regional Court confirmed yesterday a report in Financial Times Deutschland that the civil proceedings would be heard next in Vaduz,the capital of the Alpine principality.
The real estate developer wants 13 million in damages, claiming the bank should have told him the German government had incriminating information against him. He said that had he known of the impending proceedings against him, he would have come clean to the tax authorities and avoided penalties.
The man, aged 66 at the time, was given a suspended prison sentence and a fine of 7.5 million for tax evasion.In 2008, Germany's intelligence services purchased a computer disk from a former LGT employee, which contained confidential data on hundreds of clients of several nationalities, many of whom were evading taxes.
Liechtenstein has strict banking confidentiality rules, though these are in the process of being relaxed owing to international pressure against so-called tax havens.
Austria taken off "grey list"
Austria has been promoted to the "white list" of countries that comply with international tax standards, according to the latest progress report by the body leading a global fight against tax havens.
Austria had been among several states resisting the adoption of rules on forwarding account details to other tax authorities.
The change had been expected because Austrian lawmakers voted earlier this month to relax the country's banking secrecy regulations.
The change paved the pay for the country to be removed from the Parisbased Organisation for Economic Cooperation and Development's "grey list"of countries not complying with international reporting norms.
The Austrian Finance Ministry says the country has signed 15 agreements on double taxation or exchange of information with other countries, a prerequisite for getting off the grey list.
"Many more agreements are being negotiated," ministry spokesman Harald Waiglein said in Vienna.
The grey list still includes nations such as Andorra, Monaco, San Marino, and the British territory of Gibraltar.
It was not immediately clear why Monaco was still named as a tax haven,as the small state had announced last Friday that it had also fulfilled the OECD's requirement by signing 12 bilateral agreements.
Austria had been among several states resisting the adoption of rules on forwarding account details to other tax authorities.
The change had been expected because Austrian lawmakers voted earlier this month to relax the country's banking secrecy regulations.
The change paved the pay for the country to be removed from the Parisbased Organisation for Economic Cooperation and Development's "grey list"of countries not complying with international reporting norms.
The Austrian Finance Ministry says the country has signed 15 agreements on double taxation or exchange of information with other countries, a prerequisite for getting off the grey list.
"Many more agreements are being negotiated," ministry spokesman Harald Waiglein said in Vienna.
The grey list still includes nations such as Andorra, Monaco, San Marino, and the British territory of Gibraltar.
It was not immediately clear why Monaco was still named as a tax haven,as the small state had announced last Friday that it had also fulfilled the OECD's requirement by signing 12 bilateral agreements.
Tuesday, September 22, 2009
DEVELOPERS ASSURED ON REVAMP
The Finance Ministry has assured land developers they will not face an unreasonably high tax burden under a planned property tax revamp.
The ministry is revamping the property-tax structure in an effort to plug legal loopholes that allow owners of some lands and buildings to escape paying taxes.
An informed source at the Finance Ministry involved in drawing up the new property-tax rules said provisions in the latest draft reflected advice from parties likely to be affected by the new measures.
One is that the ministry will offer a tax grace period, probably of two to five years, to land developers who accumulate plots for development. This land would be subjected to a tax rate of up to 0.5 percent of the land price and would double every three years if the land is left undeveloped.
Also, newly built homes awaiting buyers would be taxed at the same rate as residential units; no more than 0.1 percent per year.
Moreover, land and buildings used for many purposes - business, farming and residential, for example - would see each portion taxed accordingly, leading to payment of several tax rates by one landowner. Land used solely for farming would be taxed at no more than 0.05 per cent, the source said.
In addition, residential units worth less than Bt500,000 may be tax-exempt altogether.
Land developers have raised concerns that the revised property taxes would increase their business costs and adversely affect the property industry as a whole.
Some local governments may need to set up funds to buy land or provide loans or other financial support to those who can't afford to pay the newly required taxes, the source said. The central government is unlikely to set up such a fund, since property tax will be collected and managed by the local governments. However, this issue has not been finalised.
Finance Ministry officials expect to finalise drafting the new property tax rules by the end of this month, before submitting them to Finance Minister Korn Chatikavanij and the Cabinet, according to the source. If approved by the Cabinet, the bill will be considered by Parliament. If Parliament approves the bill, the ministry plans to enforce the new tax laws within two years.
Under the new tax rules, residence owners would pay up to 0.1 percent of the land price. Rates could vary depending on the local administration's rules. Land used for agricultural purposes would be taxed at no more than 0.05 percent. Undeveloped land would be subject to a high tax rate of 0.5 per cent, to be doubled every three years.
Also on the horizon are a 2-percent transfer fee on property changing hands; progressive rates of income tax; a 1.5-percent stamp duty; and a 3.3-percent specific business tax that are currently exempted under the government's economic stimulus package. Homebuyers and land developers have expressed fears that the tax-code revisions would add to an already-high tax burden.
The ministry is revamping the property-tax structure in an effort to plug legal loopholes that allow owners of some lands and buildings to escape paying taxes.
An informed source at the Finance Ministry involved in drawing up the new property-tax rules said provisions in the latest draft reflected advice from parties likely to be affected by the new measures.
One is that the ministry will offer a tax grace period, probably of two to five years, to land developers who accumulate plots for development. This land would be subjected to a tax rate of up to 0.5 percent of the land price and would double every three years if the land is left undeveloped.
Also, newly built homes awaiting buyers would be taxed at the same rate as residential units; no more than 0.1 percent per year.
Moreover, land and buildings used for many purposes - business, farming and residential, for example - would see each portion taxed accordingly, leading to payment of several tax rates by one landowner. Land used solely for farming would be taxed at no more than 0.05 per cent, the source said.
In addition, residential units worth less than Bt500,000 may be tax-exempt altogether.
Land developers have raised concerns that the revised property taxes would increase their business costs and adversely affect the property industry as a whole.
Some local governments may need to set up funds to buy land or provide loans or other financial support to those who can't afford to pay the newly required taxes, the source said. The central government is unlikely to set up such a fund, since property tax will be collected and managed by the local governments. However, this issue has not been finalised.
Finance Ministry officials expect to finalise drafting the new property tax rules by the end of this month, before submitting them to Finance Minister Korn Chatikavanij and the Cabinet, according to the source. If approved by the Cabinet, the bill will be considered by Parliament. If Parliament approves the bill, the ministry plans to enforce the new tax laws within two years.
Under the new tax rules, residence owners would pay up to 0.1 percent of the land price. Rates could vary depending on the local administration's rules. Land used for agricultural purposes would be taxed at no more than 0.05 percent. Undeveloped land would be subject to a high tax rate of 0.5 per cent, to be doubled every three years.
Also on the horizon are a 2-percent transfer fee on property changing hands; progressive rates of income tax; a 1.5-percent stamp duty; and a 3.3-percent specific business tax that are currently exempted under the government's economic stimulus package. Homebuyers and land developers have expressed fears that the tax-code revisions would add to an already-high tax burden.
Sunday, September 20, 2009
LAW, TAX REFORM TO FACILITATE WORLD TRADE
Deputy Finance Minister Pradit Phataraprasit yesterday promised to revise harsh penalties under customs laws and reform the trade taxation system in order to facilitate international commerce.
The Thai Chamber of Commerce, Federation of Thai Industries (FTI) and Thai Bankers' Association have complained about the Finance Ministry's plan to revise the laws and regulations related to customs duties.
Pradit said he would reduce the fine to between zero and four times the value of imported goods from the current four times and leave it to the courts to judge the appropriate rate.
Pradit pledged to the members of the Joint Public Private Committee at the seminar that he would reform the customs system.
He would within a month propose a law amendment to the Cabinet.
An overhaul of the system should lead to lower production costs for the private sector and greater transparency in tariff procedures.
The current high fine deterred importers from taking disputes to court and they are forced to pay fines to the Customs Department instead, he added.
Kittipong Urapeepatanapong, representing the Thai Chamber of Commerce, argued that the Finance Ministry should not press criminal charges on importers if they do not mean to break the law but fail to pay taxes in full due to some mistake or typographical errors in their documentation.
He also asked the ministry to allow importers to take tariff disputes to a special court, such as the tax court, not the criminal court.
Customs agents tend to impose high fines as they have the right to receive the lion share of the fine. Those who do not intend to evade duties should not be subject to severe penalties, he said.
Ponsathorn Ansusinha, representing the three organisations, said the Customs Department should limit the period for the tax appeals committee to rule on a tax case.
Charonchai Salyapong, representing the FTI, raised concerns about the Excise Department's plan to expand the excise tax base for tax calculations next year.
Although the tariff rates on goods would be cut to zero next year under the Asean free trade agreement, the Excise Department will collect higher excise taxes than today, he said.
The department plans to calculate taxes based on the old tariff rates, he said.
If the department does as it plans, it risks violating the free trade pact, he said.
The Excise Department wants to collect more taxes to offset the loss by cutting the rates on 18 products, including cars, alcoholic beverages and cigarettes, he added.
The Thai Chamber of Commerce, Federation of Thai Industries (FTI) and Thai Bankers' Association have complained about the Finance Ministry's plan to revise the laws and regulations related to customs duties.
Pradit said he would reduce the fine to between zero and four times the value of imported goods from the current four times and leave it to the courts to judge the appropriate rate.
Pradit pledged to the members of the Joint Public Private Committee at the seminar that he would reform the customs system.
He would within a month propose a law amendment to the Cabinet.
An overhaul of the system should lead to lower production costs for the private sector and greater transparency in tariff procedures.
The current high fine deterred importers from taking disputes to court and they are forced to pay fines to the Customs Department instead, he added.
Kittipong Urapeepatanapong, representing the Thai Chamber of Commerce, argued that the Finance Ministry should not press criminal charges on importers if they do not mean to break the law but fail to pay taxes in full due to some mistake or typographical errors in their documentation.
He also asked the ministry to allow importers to take tariff disputes to a special court, such as the tax court, not the criminal court.
Customs agents tend to impose high fines as they have the right to receive the lion share of the fine. Those who do not intend to evade duties should not be subject to severe penalties, he said.
Ponsathorn Ansusinha, representing the three organisations, said the Customs Department should limit the period for the tax appeals committee to rule on a tax case.
Charonchai Salyapong, representing the FTI, raised concerns about the Excise Department's plan to expand the excise tax base for tax calculations next year.
Although the tariff rates on goods would be cut to zero next year under the Asean free trade agreement, the Excise Department will collect higher excise taxes than today, he said.
The department plans to calculate taxes based on the old tariff rates, he said.
If the department does as it plans, it risks violating the free trade pact, he said.
The Excise Department wants to collect more taxes to offset the loss by cutting the rates on 18 products, including cars, alcoholic beverages and cigarettes, he added.
Friday, September 18, 2009
INCENTIVES TO BE EXTENDED IF ECONOMY FAILS TO PICK UP
The government would consider extending tax incentives to the property sector if the country were to experience weak growth next year, Deputy Finance Minister Pradit Pataraprasit said.
Speaking at a seminar on "Where is the best location for investment", Pradit said the government would lend its support to the property sector if the economy did not do well.
The seminar was organised by Krungthep Turakij, and three property associations - Thai Real Estate Association, Thai Condominium Association, and Business Housing Association.
The government earlier this year extended tax incentives to the property sector until March 28, 2010. The tax incentives include a reduction in the specific business tax on property sales from 3.3 per cent to 0.11 per cent and a cut in transfer and mortgage fees from 2 per cent to 0.01 per cent. It also increased the tax allowance on property sales from Bt100,000 to Bt300,000.
Meanwhile, mortgage loans in the property sector recorded only a 2.2-per-cent growth in the first half of this year due to the weakening economy. But the property market is expected to recover in the last quarter of this year as a result of credit growth.
Mortgage loans are expected to increase by 6.7 per cent, Chatchai Phayuhanaveechai, deputy managing director of KasikornBank, said.
If the government extends tax incentives to the property sector, that would help home-buyers to save costs by at least 5 per cent because the prices of construction raw materials have already risen, Wasan Kongchan, managing director of Agency for Real Estate Affair (AREA), said.
He added that if the tax incentives expire on March 28, 2010, prices of residences will increase 7 to 10 per cent next year - 4 per cent from tax and transfer fees - as a result of the rise in the cost of construction raw materials.
He added that demand for residences around the mass-transit system, especially Skytrain and underground trains, are popular for both home-buyers and investors as a result prices in these locations are likely to increase an average 10 to 20 per cent a year.
The areas are Sukhumvit, Ratchadaphisek, Silom and Sathorn.
However, the government's policy to extend Skytrain routes and underground train routes such as the Sathorn-Taksin and Onnuj-Baring routes will also drive demand for residential homes along the extended mass-transit system routes.
He added that if the government succeeds in the construction of the new Skytrain and underground train routes from inner city to around the city, that will change demand for residential projects from condominiums to low-rise residential projects located close to the new extended routes.
Speaking at a seminar on "Where is the best location for investment", Pradit said the government would lend its support to the property sector if the economy did not do well.
The seminar was organised by Krungthep Turakij, and three property associations - Thai Real Estate Association, Thai Condominium Association, and Business Housing Association.
The government earlier this year extended tax incentives to the property sector until March 28, 2010. The tax incentives include a reduction in the specific business tax on property sales from 3.3 per cent to 0.11 per cent and a cut in transfer and mortgage fees from 2 per cent to 0.01 per cent. It also increased the tax allowance on property sales from Bt100,000 to Bt300,000.
Meanwhile, mortgage loans in the property sector recorded only a 2.2-per-cent growth in the first half of this year due to the weakening economy. But the property market is expected to recover in the last quarter of this year as a result of credit growth.
Mortgage loans are expected to increase by 6.7 per cent, Chatchai Phayuhanaveechai, deputy managing director of KasikornBank, said.
If the government extends tax incentives to the property sector, that would help home-buyers to save costs by at least 5 per cent because the prices of construction raw materials have already risen, Wasan Kongchan, managing director of Agency for Real Estate Affair (AREA), said.
He added that if the tax incentives expire on March 28, 2010, prices of residences will increase 7 to 10 per cent next year - 4 per cent from tax and transfer fees - as a result of the rise in the cost of construction raw materials.
He added that demand for residences around the mass-transit system, especially Skytrain and underground trains, are popular for both home-buyers and investors as a result prices in these locations are likely to increase an average 10 to 20 per cent a year.
The areas are Sukhumvit, Ratchadaphisek, Silom and Sathorn.
However, the government's policy to extend Skytrain routes and underground train routes such as the Sathorn-Taksin and Onnuj-Baring routes will also drive demand for residential homes along the extended mass-transit system routes.
He added that if the government succeeds in the construction of the new Skytrain and underground train routes from inner city to around the city, that will change demand for residential projects from condominiums to low-rise residential projects located close to the new extended routes.
Tax benefits plan to boost reading
In a bid to promote reading habits, the Education Ministry is planning to offer tax benefits for people who like reading and book donors.
Education Minister Jurin Laksanawisit said yesterday that a committee was studying tax measures to see how they can encourage Thais to read more.
"Perhaps, we should offer tax refunds when people present receipts of previous book purchases," he said. "We could also offer tax deductions to private firms if they donate books."
According to Jurin, the committee is expected to present a proposal to the Reading Promotion Committee (RPC) on October 1. "We will then refer the proposal to the Cabinet." Jurin was speaking after a meeting with the RPC.
The committee has set several goals that it hopes to achieve by 2012, including getting Thais to read at least 10 books instead of just five per year.
Education Minister Jurin Laksanawisit said yesterday that a committee was studying tax measures to see how they can encourage Thais to read more.
"Perhaps, we should offer tax refunds when people present receipts of previous book purchases," he said. "We could also offer tax deductions to private firms if they donate books."
According to Jurin, the committee is expected to present a proposal to the Reading Promotion Committee (RPC) on October 1. "We will then refer the proposal to the Cabinet." Jurin was speaking after a meeting with the RPC.
The committee has set several goals that it hopes to achieve by 2012, including getting Thais to read at least 10 books instead of just five per year.
Tuesday, September 15, 2009
BOI SURVEY FINDS INVESTORS START TO RECRUIT AGAIN
A Board of Investment survey shows 42 per cent of promoted investors in six industries have hired more staff, thanks to signs of an economic recovery.
These firms are preparing to boost production to last year's precrisis level.
The survey covered 371 promoted companies having a minimum investment of Bt500 million each.
Secretary-general Atchaka Sibunruang Brimble said 155 companies, or 42 per cent of the respondents, reported hiring more employees in July, particularly in electrical appliances and electronics, raising their recruitment of temporary workers 62 per cent.
Forty-seven per cent of respondents maintained their recruitment at the same level as at the beginning of the year after most of them terminated some workers in the wake of the financial meltdown.
She said 94 respondents insisted they would expand their investment in Thailand this year by a combined Bt113 billion, while 200 companies had no expansion plan this year or would wait to see whether the global economy did recover.
Of that amount, Bt43.7 billion will come from the chemical, paper and plastic sectors, Bt21.8 billion from services and infrastructure, Bt19.1 billion from electric-appliances and electronics and Bt14.7 billion from the agricultural sector.
She said used production capacity would be maintained at 64.3 per cent, similar to last year but up from 61.5 per cent in 2007.
Meanwhile, the BOI yesterday set up a committee to revise regulations and incentives to attract more foreign companies to set up regional headquarters in Thailand.
The incentive revision will cover a reduction in corporate income tax, which is the main concern for the private sector, because Thailand's rate is much higher than in other places, including Singapore, Malaysia and Hong Kong.
"Despite being a production hub for several industries, including autos and electronics, foreign firms do not set up their headquarters in Thailand, due to the high tax rate. Therefore, we've appointed a committee to reconsider and revise outdated regulations and incentives to attract them," said Industry Minister Charnchai Chairungrueng.
The committee will be led by Deputy Finance Minister Pradit Pataraprasit and consist of representatives from both the private sector and state agencies, including the BoI, the Fiscal Policy Office, the Revenue and Business Development departments, the Bank of Thailand, the Federation of Thai Industries and the Board of Trade.
He said the revision would be finished in two months.
So far, 81 companies have won BOI tax incentives to set up their regional headquarters here, including Exxon Mobil, Asian Honda Motor and Chevron Asia South.
Charnchai said the board also agreed to set up a fund for technology and human-resource development aimed at increasing the Kingdom's competitiveness in research and development and innovation.
The fund will focus on promoting this type of investment among small and medium-sized enterprises.
The BoI's board also approved four investment projects worth a combined Bt16 billion, from Thai Airways International, Thai Samsung Electronics, Cataler (Thailand) and Sahaviriya Plate Mill.
These firms are preparing to boost production to last year's precrisis level.
The survey covered 371 promoted companies having a minimum investment of Bt500 million each.
Secretary-general Atchaka Sibunruang Brimble said 155 companies, or 42 per cent of the respondents, reported hiring more employees in July, particularly in electrical appliances and electronics, raising their recruitment of temporary workers 62 per cent.
Forty-seven per cent of respondents maintained their recruitment at the same level as at the beginning of the year after most of them terminated some workers in the wake of the financial meltdown.
She said 94 respondents insisted they would expand their investment in Thailand this year by a combined Bt113 billion, while 200 companies had no expansion plan this year or would wait to see whether the global economy did recover.
Of that amount, Bt43.7 billion will come from the chemical, paper and plastic sectors, Bt21.8 billion from services and infrastructure, Bt19.1 billion from electric-appliances and electronics and Bt14.7 billion from the agricultural sector.
She said used production capacity would be maintained at 64.3 per cent, similar to last year but up from 61.5 per cent in 2007.
Meanwhile, the BOI yesterday set up a committee to revise regulations and incentives to attract more foreign companies to set up regional headquarters in Thailand.
The incentive revision will cover a reduction in corporate income tax, which is the main concern for the private sector, because Thailand's rate is much higher than in other places, including Singapore, Malaysia and Hong Kong.
"Despite being a production hub for several industries, including autos and electronics, foreign firms do not set up their headquarters in Thailand, due to the high tax rate. Therefore, we've appointed a committee to reconsider and revise outdated regulations and incentives to attract them," said Industry Minister Charnchai Chairungrueng.
The committee will be led by Deputy Finance Minister Pradit Pataraprasit and consist of representatives from both the private sector and state agencies, including the BoI, the Fiscal Policy Office, the Revenue and Business Development departments, the Bank of Thailand, the Federation of Thai Industries and the Board of Trade.
He said the revision would be finished in two months.
So far, 81 companies have won BOI tax incentives to set up their regional headquarters here, including Exxon Mobil, Asian Honda Motor and Chevron Asia South.
Charnchai said the board also agreed to set up a fund for technology and human-resource development aimed at increasing the Kingdom's competitiveness in research and development and innovation.
The fund will focus on promoting this type of investment among small and medium-sized enterprises.
The BoI's board also approved four investment projects worth a combined Bt16 billion, from Thai Airways International, Thai Samsung Electronics, Cataler (Thailand) and Sahaviriya Plate Mill.
Monday, September 14, 2009
CHINA IRE OVER US TYRE TARIFFS
The decision by the US administration to impose tariffs on tyre imports from China will be a huge blow to the Chinese tyre producers and the Chinese government should take strong counter-measures against exports from America, an industry official said.
"President [Barack] Obama has increased duties to all imports of passenger vehicle and light-truck tyres from China for a period of three years," the White House said in a statement on Friday.
In addition to the existing duty of 4 per cent, tariffs will surge by a further 35 per cent in the first year, 30 per cent in the second and 25 per cent in the third. The tariffs will take effect any day before September 26.
"The new tariffs will be highly damaging to China's tyre industry," said Fan Rende, chairman of China Rubber Industry Association, adding that Chinese tyre companies may not be able to export tyres to the US due to the unreasonably high tariff of 35 per cent starting from next year.
"Obama's decision may affect the employment of 100,000 tyre workers in China and may bring an aggregated loss of $1 billion (Bt34.4 billion) to China's tyre exporters," Fan said.
There are currently twenty tyre makers in China and four of them are from the US. He did not reveals the names of the four producers, but currently US tyre manufacturers, such as Bridhestone/Firestone, Goodyear, Michelin and Cooper have operations in China.
Actually, the US had already ordered Chinese tyre companies to stop supplying tyres to the US, Fan said. "The order is effective immediately," he said.
Fan urged the Chinese government to take countermeasures against US tariffs, especially on US exports of agricultural products and cars to China.
"I believe we could find ample cases that are also in line with the WTO rule," he said.
China Rubber Industry Association, China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters as well as some affected companies had already signed a complaint letter to President Obama.
In addition, they are considering seeking justice from the United States Court of International Trade, Fan said.
"President [Barack] Obama has increased duties to all imports of passenger vehicle and light-truck tyres from China for a period of three years," the White House said in a statement on Friday.
In addition to the existing duty of 4 per cent, tariffs will surge by a further 35 per cent in the first year, 30 per cent in the second and 25 per cent in the third. The tariffs will take effect any day before September 26.
"The new tariffs will be highly damaging to China's tyre industry," said Fan Rende, chairman of China Rubber Industry Association, adding that Chinese tyre companies may not be able to export tyres to the US due to the unreasonably high tariff of 35 per cent starting from next year.
"Obama's decision may affect the employment of 100,000 tyre workers in China and may bring an aggregated loss of $1 billion (Bt34.4 billion) to China's tyre exporters," Fan said.
There are currently twenty tyre makers in China and four of them are from the US. He did not reveals the names of the four producers, but currently US tyre manufacturers, such as Bridhestone/Firestone, Goodyear, Michelin and Cooper have operations in China.
Actually, the US had already ordered Chinese tyre companies to stop supplying tyres to the US, Fan said. "The order is effective immediately," he said.
Fan urged the Chinese government to take countermeasures against US tariffs, especially on US exports of agricultural products and cars to China.
"I believe we could find ample cases that are also in line with the WTO rule," he said.
China Rubber Industry Association, China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters as well as some affected companies had already signed a complaint letter to President Obama.
In addition, they are considering seeking justice from the United States Court of International Trade, Fan said.
Sunday, September 13, 2009
Court sentences Sondhi to 2 years in jail
The Criminal Court has sentenced Sondhi Limthongkul to two years in prison without probation for defaming former deputy prime minister MR Pridiyathorn Devakula.
Mr Sondhi, a key leader of the People's Alliance for Democracy, was yesterday found guilty of libel in connection with remarks he made about MR Pridiyathorn during his Muang Thai Rai Sapda (Thailand Weekly) talk show, which aired on ATSV on Jan 12,2007.
Mr Sondhi was released yesterday on bail of 200,000 baht. He said he would appeal his conviction.
Named as co-defendants were Thaiday Dot Com Co, the producer of the talk show and operator of ASTV, the Manager Media Group and Khunthong Lorseriwanich, editor and publisher of the Manager newspaper.MR Pridiyathorn said Mr Sondhi accused him of approving the illegal sale of two- and three-digit lottery tickets and amending the law on the Government Lottery Office to clear 47 people,including former ministers and GLO executives, criticised by the former Assets Scrutiny Committee over the launch of the lottery in 2003.
MR Pridiyathorn, who was also finance minister at the time, said Mr Sondhi also accused him of protecting former revenue department chief Sirote Sawasdipanich from prosecution over his alleged failure to collect 270 million baht in taxes in the 1997 Shin Corp share case.
Mr Sirote was acquitted by the courts of the charge.
The Criminal Court found Mr Sondhi's claims were groundless and could lead people to misunderstand MR Pridiyathorn. The court also found Thaiday Dot Com libelled MR Pridiyathorn by recording and disseminating the claims on VCD. It was fined 200,000 baht. Mr Khunthong also libelled MR Pridiyathorn,the court said, by publishing the remarks in the Jan 13 to Jan 16,2007, editions of the Manager . The court sentenced him to one year in jail, suspended for two years, as he was a first-time offender.He was also fined 30,000 baht.
Mr Sondhi, Mr Khunthong and Thaiday Dot Com have been ordered to publish apologies to MR Pridiyathorn in newspapers for five consecutive days.The court acquitted Manager Media Group of the charge as there was no evidence implicating its executives.
Mr Sondhi, a key leader of the People's Alliance for Democracy, was yesterday found guilty of libel in connection with remarks he made about MR Pridiyathorn during his Muang Thai Rai Sapda (Thailand Weekly) talk show, which aired on ATSV on Jan 12,2007.
Mr Sondhi was released yesterday on bail of 200,000 baht. He said he would appeal his conviction.
Named as co-defendants were Thaiday Dot Com Co, the producer of the talk show and operator of ASTV, the Manager Media Group and Khunthong Lorseriwanich, editor and publisher of the Manager newspaper.MR Pridiyathorn said Mr Sondhi accused him of approving the illegal sale of two- and three-digit lottery tickets and amending the law on the Government Lottery Office to clear 47 people,including former ministers and GLO executives, criticised by the former Assets Scrutiny Committee over the launch of the lottery in 2003.
MR Pridiyathorn, who was also finance minister at the time, said Mr Sondhi also accused him of protecting former revenue department chief Sirote Sawasdipanich from prosecution over his alleged failure to collect 270 million baht in taxes in the 1997 Shin Corp share case.
Mr Sirote was acquitted by the courts of the charge.
The Criminal Court found Mr Sondhi's claims were groundless and could lead people to misunderstand MR Pridiyathorn. The court also found Thaiday Dot Com libelled MR Pridiyathorn by recording and disseminating the claims on VCD. It was fined 200,000 baht. Mr Khunthong also libelled MR Pridiyathorn,the court said, by publishing the remarks in the Jan 13 to Jan 16,2007, editions of the Manager . The court sentenced him to one year in jail, suspended for two years, as he was a first-time offender.He was also fined 30,000 baht.
Mr Sondhi, Mr Khunthong and Thaiday Dot Com have been ordered to publish apologies to MR Pridiyathorn in newspapers for five consecutive days.The court acquitted Manager Media Group of the charge as there was no evidence implicating its executives.
Friday, September 11, 2009
US taxpayers 'unlikely' to recoup auto bailout cash
US taxpayers face losses on a significant portion of the $81 billion in government aid provided to the auto industry, an oversight panel said in a report released yesterday.
The Congressional Oversight Panel did not provide an estimate of the projected loss in its latest monthly report on the $700 billion Troubled Asset Relief Programme.
But it said most of the $23 billion initially provided to General Motors Corp and Chrysler LLC late last year "is unlikely to be repaid."
"I think they drove a very hard bargain," said Elizabeth Warren, the panel's chairwoman and a law professor at Harvard University, referring to the Obama administration's Treasury Department."But it may not be enough."
"The prospect of recovering the government's assistance to GM and Chrysler is heavily dependent on shares of the two companies rising to unprecedented levels," the report said.
The government owns 10% of Chrysler and 61% of GM. The two companies are currently private but are expected to issue stock, in GM's case by next year.
The shares "will have to appreciate sharply" for taxpayers to get their money back, the report said.
For example, GM's market value would have to reach $67.6 billion, the report said, a "highly optimistic" estimate and more than the $57.2 billion GM was worth at the height of its share value in April 2008. And in the case of Chrysler,about $5.4 billion of the $14.3 billion provided to the company is "highly unlikely" to ever be repaid, the panel said.
Treasury Department officials have acknowledged that most of the $23 billion provided by the Bush administration is likely to be lost.
But Meg Reilly, a department spokeswoman, said there "is a reasonably high probability of the return of most or all of the government funding" that was provided to assist GM and Chrysler with their restructurings.
Administration officials have previous-ly said they want to maximise taxpayers'return on the investment but want to dispose of the government's ownership interests as soon as practicable.
"We are not trying to be Warren Buffett here. We are not trying to squeeze every last dollar out," Steve Rattner, who led the administration's auto task force, said before his departure in July.
"We do want to do well for the taxpayers but the most important thing is to get the government out of the car business."
Greg Martin, a spokesman for the new GM, said the company "is confident that we will repay our nation's support because we are a company with less debt, a stronger balance sheet, a winning product portfolio and the right size to match today's market realities."
The Congressional Oversight Panel was created as part of the Troubled Asset Relief Programme, or TARP.
It is designed to provide an additional layer of oversight, beyond the Special Inspector General for the TARP and regular audits by the Government Accountability Office.
The panel's report recommends that the Treasury Department consider placing its auto company holdings into an independent trust, to avoid any "conflicts of interest."
The report also recommends the department perform a legal analysis of its decision to provide TARP funds to GM and Chrysler, their financing arms and many auto parts suppliers. Some critics say the law creating TARP didn't allow for such funding.
The panel's members include Rep Jeb Hensarling, a Texas Republican, who dissented from the report. Hensarling said the auto companies should never have received funding and criticised the government for picking "winners and losers."
Other agencies have also projected large losses on the loans and investments provided to the industry. The Congressional Budget Office estimated in June that taxpayers would lose about $40 billion of the first $55 billion in aid.
The Congressional Oversight Panel did not provide an estimate of the projected loss in its latest monthly report on the $700 billion Troubled Asset Relief Programme.
But it said most of the $23 billion initially provided to General Motors Corp and Chrysler LLC late last year "is unlikely to be repaid."
"I think they drove a very hard bargain," said Elizabeth Warren, the panel's chairwoman and a law professor at Harvard University, referring to the Obama administration's Treasury Department."But it may not be enough."
"The prospect of recovering the government's assistance to GM and Chrysler is heavily dependent on shares of the two companies rising to unprecedented levels," the report said.
The government owns 10% of Chrysler and 61% of GM. The two companies are currently private but are expected to issue stock, in GM's case by next year.
The shares "will have to appreciate sharply" for taxpayers to get their money back, the report said.
For example, GM's market value would have to reach $67.6 billion, the report said, a "highly optimistic" estimate and more than the $57.2 billion GM was worth at the height of its share value in April 2008. And in the case of Chrysler,about $5.4 billion of the $14.3 billion provided to the company is "highly unlikely" to ever be repaid, the panel said.
Treasury Department officials have acknowledged that most of the $23 billion provided by the Bush administration is likely to be lost.
But Meg Reilly, a department spokeswoman, said there "is a reasonably high probability of the return of most or all of the government funding" that was provided to assist GM and Chrysler with their restructurings.
Administration officials have previous-ly said they want to maximise taxpayers'return on the investment but want to dispose of the government's ownership interests as soon as practicable.
"We are not trying to be Warren Buffett here. We are not trying to squeeze every last dollar out," Steve Rattner, who led the administration's auto task force, said before his departure in July.
"We do want to do well for the taxpayers but the most important thing is to get the government out of the car business."
Greg Martin, a spokesman for the new GM, said the company "is confident that we will repay our nation's support because we are a company with less debt, a stronger balance sheet, a winning product portfolio and the right size to match today's market realities."
The Congressional Oversight Panel was created as part of the Troubled Asset Relief Programme, or TARP.
It is designed to provide an additional layer of oversight, beyond the Special Inspector General for the TARP and regular audits by the Government Accountability Office.
The panel's report recommends that the Treasury Department consider placing its auto company holdings into an independent trust, to avoid any "conflicts of interest."
The report also recommends the department perform a legal analysis of its decision to provide TARP funds to GM and Chrysler, their financing arms and many auto parts suppliers. Some critics say the law creating TARP didn't allow for such funding.
The panel's members include Rep Jeb Hensarling, a Texas Republican, who dissented from the report. Hensarling said the auto companies should never have received funding and criticised the government for picking "winners and losers."
Other agencies have also projected large losses on the loans and investments provided to the industry. The Congressional Budget Office estimated in June that taxpayers would lose about $40 billion of the first $55 billion in aid.
Tuesday, September 8, 2009
Nissan eco-car is on track but excise tax cut needed
Nissan says it is confident it can meet Board of Investment conditions to build 100,000 small, fuel-efficient eco-cars within five years but says excise taxes levied on the cars are too high.
The Japanese carmaker is on track to become Thailand's first eco-car producer while its peers' projects look less certain.
"Our project remains 100% on track and will never be delayed ... despite the deepening [economic] crisis," said Toru Hasegawa, the president of Nissan Motors Thailand.
Nissan is expected to launch the ecocars in the Thai market next year. A company source said the car was expected to be launched before the Bangkok International Motor Show next March.
"We will officially announce all the details of the Nissan eco-cars next month," said Mr Hasegawa.
Many other automakers with BoI promotional privileges to build eco-cars have postponed their plans as they were unsure they could meet the conditions as both local and export demand have plunged. The BoI requires them to produce at least 100,000 eco-cars per year in the fifth year of operations.
These companies want authorities to relax the annual output rule.
The source said Nissan was not wor-ried about its eco-car output as its Japanese parent intends to shift small car production from Japan to Thailand in 2010 and then export them back to Japan and other countries.
Car production in Japan has been hard hit by the strong yen.
Mr Hasegawa said Nissan disagreed with changing the BoI regulation since carmakers had accepted the terms when their projects were granted privileges.
"We play by the rules and we would not be happy if there were any changes in the Boi's regulation," he said.
Nissan will invest about 5.5 billion baht to produce between 100,000 and 150,000 eco-cars in Thailand.
Mr Hasegawa also questioned why the excise tax levied on eco-cars was higher than for hybrid electric vehicles.
He said eco-cars would contribute significantly to Thailand's economy and generate many jobs because most parts are locally produced, while the cars are fuel efficient and environmentally friendly with low emissions. Hybrid electric cars, however, need imported parts for local assembly.
Excise tax is 17% for eco-cars but only 10% on petrol-electric cars.
At present, Toyota offers Camry hybrids in the Thai market while other carmakers are waiting to gauge market response to the Camry.
The Japanese carmaker is on track to become Thailand's first eco-car producer while its peers' projects look less certain.
"Our project remains 100% on track and will never be delayed ... despite the deepening [economic] crisis," said Toru Hasegawa, the president of Nissan Motors Thailand.
Nissan is expected to launch the ecocars in the Thai market next year. A company source said the car was expected to be launched before the Bangkok International Motor Show next March.
"We will officially announce all the details of the Nissan eco-cars next month," said Mr Hasegawa.
Many other automakers with BoI promotional privileges to build eco-cars have postponed their plans as they were unsure they could meet the conditions as both local and export demand have plunged. The BoI requires them to produce at least 100,000 eco-cars per year in the fifth year of operations.
These companies want authorities to relax the annual output rule.
The source said Nissan was not wor-ried about its eco-car output as its Japanese parent intends to shift small car production from Japan to Thailand in 2010 and then export them back to Japan and other countries.
Car production in Japan has been hard hit by the strong yen.
Mr Hasegawa said Nissan disagreed with changing the BoI regulation since carmakers had accepted the terms when their projects were granted privileges.
"We play by the rules and we would not be happy if there were any changes in the Boi's regulation," he said.
Nissan will invest about 5.5 billion baht to produce between 100,000 and 150,000 eco-cars in Thailand.
Mr Hasegawa also questioned why the excise tax levied on eco-cars was higher than for hybrid electric vehicles.
He said eco-cars would contribute significantly to Thailand's economy and generate many jobs because most parts are locally produced, while the cars are fuel efficient and environmentally friendly with low emissions. Hybrid electric cars, however, need imported parts for local assembly.
Excise tax is 17% for eco-cars but only 10% on petrol-electric cars.
At present, Toyota offers Camry hybrids in the Thai market while other carmakers are waiting to gauge market response to the Camry.
Monday, September 7, 2009
Advice centre launched for importers
The customs department has launched a new service to provide advice to importers about customs procedures and tariff rates.
The new "Customs Clinic" advisory programme is part of a broader policy to move the department away from merely collecting taxes towards facilitating trade, said Pradit Phataraprasit, a deputy finance minister.
The role of customs as a revenue source will decline steadily thanks to trade liberalisation under commitments made to the World Trade Organisation and Asean Free Trade Area, he said.
"With over 70% of Thailand's gross domestic product generated by foreign trade, the Customs Department can do a lot to help businesses operate more efficiently and help Thailand become a more competitive manufacturing base,as well as helping to accelerate economic recovery," he said.
More than 40 experts will man the clinic to answer questions about customs procedures. Most questions should be answered within three days, or five days for more technical queries which require consulting with other agencies.
Questions regarding tariff classifications or price calculations will be answered within 60 days.
Advice offered through the clinic may not be legally binding, however, said Customs director-general Wisudhi Srisuphan. But the department would aim to give the best advice to importers on how best to manage their tax liabilities.
"Some of the queries we expect may be quite technical, and require additional input from bodies such as the World Customs Organisation," he said."We are concerned that if advice was made binding, officials may be more reluctant (to give advice) than otherwise."
Mr Wisudhi said the clinic has already received 171 queries since its trials began in August. Most questions were related to customs formalities, tariffs, prices and banned items.
The clinic can be reached at 02667 7880-4, by email at customs_clinic@customs.go.th or at customs offices nationwide.
The new "Customs Clinic" advisory programme is part of a broader policy to move the department away from merely collecting taxes towards facilitating trade, said Pradit Phataraprasit, a deputy finance minister.
The role of customs as a revenue source will decline steadily thanks to trade liberalisation under commitments made to the World Trade Organisation and Asean Free Trade Area, he said.
"With over 70% of Thailand's gross domestic product generated by foreign trade, the Customs Department can do a lot to help businesses operate more efficiently and help Thailand become a more competitive manufacturing base,as well as helping to accelerate economic recovery," he said.
More than 40 experts will man the clinic to answer questions about customs procedures. Most questions should be answered within three days, or five days for more technical queries which require consulting with other agencies.
Questions regarding tariff classifications or price calculations will be answered within 60 days.
Advice offered through the clinic may not be legally binding, however, said Customs director-general Wisudhi Srisuphan. But the department would aim to give the best advice to importers on how best to manage their tax liabilities.
"Some of the queries we expect may be quite technical, and require additional input from bodies such as the World Customs Organisation," he said."We are concerned that if advice was made binding, officials may be more reluctant (to give advice) than otherwise."
Mr Wisudhi said the clinic has already received 171 queries since its trials began in August. Most questions were related to customs formalities, tariffs, prices and banned items.
The clinic can be reached at 02667 7880-4, by email at customs_clinic@customs.go.th or at customs offices nationwide.
Friday, September 4, 2009
Coca-Cola chairman argues for excise tax, price-control
Coca-Cola company's chief has urged Thailand to cut or waive the excise tax on carbonated drinks, with a promise to invest more in Thailand and employ more Thai workers if the issue is reviewed.
Muhtar Kent, chairman of US-based Coca-Cola, said while paying a visit to Prime Minister Abhisit Vejjajiva yesterday at Government House that a reform of excise taxes and pricing controls would pave the way for fair competition and benefit the Thai economy.
Kiat Sitthiamorn, president of the Thailand Trade Representative Office, said after the meeting: "Kent said the pricing controls and the excise taxes are major investment obstacles. The pricing controls, which require the declaration of cost and sale prices to the Commerce Ministry, is now imposed in a few countries like Laos, Cambodia, Vietnam and Egypt.
"Meanwhile, Thailand also imposes excise taxes only on carbonated drinks, not all types of beverages. This creates unfair competition. He also complains that Coca-Cola business in Thailand has failed to effectively grow despite annual investment of Bt1 billion throughout the 40-year period."
Kiat noted that Kent did not demand an abrupt tax cut or waiver, but said the government's review would ensure fair practices and fairness to manufacturers and consumers and importantly, this will support Coca-Cola's further investment in Thailand. The trade representative said he would compile information about reducing investment obstacles for submission to the prime minister.
During the meeting, Kent commended Thailand as one of the countries that survived the economic crisis well, with its stable financial sector and apparent improvement in economic figures.
Kent visited Thailand as president of the US-Asean Business Council. Abhisit is scheduled to join the council's roundtable discussion on Sept 23 in New York, aiming to restore foreign confidence in Thailand.
Muhtar Kent, chairman of US-based Coca-Cola, said while paying a visit to Prime Minister Abhisit Vejjajiva yesterday at Government House that a reform of excise taxes and pricing controls would pave the way for fair competition and benefit the Thai economy.
Kiat Sitthiamorn, president of the Thailand Trade Representative Office, said after the meeting: "Kent said the pricing controls and the excise taxes are major investment obstacles. The pricing controls, which require the declaration of cost and sale prices to the Commerce Ministry, is now imposed in a few countries like Laos, Cambodia, Vietnam and Egypt.
"Meanwhile, Thailand also imposes excise taxes only on carbonated drinks, not all types of beverages. This creates unfair competition. He also complains that Coca-Cola business in Thailand has failed to effectively grow despite annual investment of Bt1 billion throughout the 40-year period."
Kiat noted that Kent did not demand an abrupt tax cut or waiver, but said the government's review would ensure fair practices and fairness to manufacturers and consumers and importantly, this will support Coca-Cola's further investment in Thailand. The trade representative said he would compile information about reducing investment obstacles for submission to the prime minister.
During the meeting, Kent commended Thailand as one of the countries that survived the economic crisis well, with its stable financial sector and apparent improvement in economic figures.
Kent visited Thailand as president of the US-Asean Business Council. Abhisit is scheduled to join the council's roundtable discussion on Sept 23 in New York, aiming to restore foreign confidence in Thailand.
FINANCE MINISTRY MULLS TAX BREAKS
The Finance Ministry is considering waiving all or part of the 10-per-cent excise tax on spa services,to promote tourism, one of the key sectors vital for economic growth.
"I have assigned senior official to look at tax issues for the spa business," Finance Minister Korn Chatikavanij said yesterday after chairing the opening ceremony for the "Thais Travelling Thailand" fair at the Queen Sirikit National Convention Centre in Bangkok.
However, he did not say how much the excise tax should be cut.
The ministry imposes a 10-per-cent excise tax rate on spa and massage-parlour services, partly because they consume a great amount of water. Owners of these services are also subject to income tax.
A source said the ministry might eliminate the excise tax but that the cut would apply only to spas and not to massage parlours.
Previously, the ministry targeted collecting tax from massage-parlour services, as it did not want to support underground sex services. Tax was imposed on spas in order to prevent tax evasion by massage-parlour operators concealing their activities as spa services. Spa services until recently were not promoted by the government.
Legitimate spa services have become popular in recently years, due to both health consciousness among consumers and government support.
"We may make new definitions of the spas that will enjoy tax cuts, and their services may need to be certified by the Public Health Ministry," the source said.
Korn said the government had also assigned the Government Savings Bank and the Small and Medium Enterprise Development Bank to lend more in support of tourism, which had suffered heavily from political instability, global economic turmoil and the outbreak of type-A (H1N1) influenza.
Korn was optimistic, saying there were signs of tourism recovery, with Thai Airways International, the national flag carrier, reporting more ticket bookings. He conceded that foreign tourists are still concerned about political rallies in the country.
"Tour agents are asked by tourists whether there will be airport blockages or street violence," said Korn.
Korn said one way to promote tourism is to campaign for in-country travelling among Thai customers.
About 800 counters of tour agents, hotel, airlines, spa and car rentals are participating in the fair, which runs until Sunday. Exhibitors estimate the fair will generate Bt400 million in sales of tour packages.
"I have assigned senior official to look at tax issues for the spa business," Finance Minister Korn Chatikavanij said yesterday after chairing the opening ceremony for the "Thais Travelling Thailand" fair at the Queen Sirikit National Convention Centre in Bangkok.
However, he did not say how much the excise tax should be cut.
The ministry imposes a 10-per-cent excise tax rate on spa and massage-parlour services, partly because they consume a great amount of water. Owners of these services are also subject to income tax.
A source said the ministry might eliminate the excise tax but that the cut would apply only to spas and not to massage parlours.
Previously, the ministry targeted collecting tax from massage-parlour services, as it did not want to support underground sex services. Tax was imposed on spas in order to prevent tax evasion by massage-parlour operators concealing their activities as spa services. Spa services until recently were not promoted by the government.
Legitimate spa services have become popular in recently years, due to both health consciousness among consumers and government support.
"We may make new definitions of the spas that will enjoy tax cuts, and their services may need to be certified by the Public Health Ministry," the source said.
Korn said the government had also assigned the Government Savings Bank and the Small and Medium Enterprise Development Bank to lend more in support of tourism, which had suffered heavily from political instability, global economic turmoil and the outbreak of type-A (H1N1) influenza.
Korn was optimistic, saying there were signs of tourism recovery, with Thai Airways International, the national flag carrier, reporting more ticket bookings. He conceded that foreign tourists are still concerned about political rallies in the country.
"Tour agents are asked by tourists whether there will be airport blockages or street violence," said Korn.
Korn said one way to promote tourism is to campaign for in-country travelling among Thai customers.
About 800 counters of tour agents, hotel, airlines, spa and car rentals are participating in the fair, which runs until Sunday. Exhibitors estimate the fair will generate Bt400 million in sales of tour packages.
Friday, August 28, 2009
Land Act rates to be reviewed
The government will review tax rates proposed under the draft Land and Building Tax Act to be fair to all parties,says Somchai Sujjapongse, directorgeneral of the Fiscal Policy Office.
The draft act sets three rates of property and building tax -0.5% for commercial land and properties,0.1% for residential properties and 0.05% for agricultural properties.
The new law will replace the Building and Land Tax Act B.E.2475 and the Local Development Tax B.E.2508. It will reduce tax revenues for local authorities, who want the rates revised.
The FPO may also consider a progressive rate for high-value properties but it has yet to set a value. Residential units worth less than one million baht are expected to be exempt from the tax, but this could also change, depending on the situation when the tax is implemented, said Mr Somchai.
"The law is aimed at pushing landowners to utilise their land and to bring unused land plots into the market, because the department found that more than 90% of Thais hold less than one rai on average while the other 10% hold more than 100 rai on average," he said.
The office will carefully define "unused land" as many owners try to have unused land categorised as agricultural plots, which qualify for the lowest tax rate, said Mr Somchai.
For example, a piece of land would be defined as an agricultural plot when a certain proportion - possibly 75%is used for growing crops. Currently,some landlords try to avoid tax by growing a few trees on a large plot and claiming it as agricultural land or a public park.
Collections of taxes under the new law should start in 2012, because the Treasury Department has so far only appraised 6 million out of 31 million plots, said Mr Somchai. If the department cannot complete its task by 2012,tax will be collected according to blocks of land.
Developers are urging the office to review tax on land banks for future development. They say they cannot develop projects on all their land plots at the same time without creating an oversupply in the market.
The government should clarity the definition of several words in the bill to prevent the kind of disputes that currently arise over the collection of household tax, said Dr Supalakana Pinitpuvadol, a lecturer at Chulalongkorn University's faculty of law.
For example,"building or other building" in Article 5, which covers rafts,should clarify which rafts are included - rafts in resorts, rafts on rivers used for accommodation or rafts in theme parks, she said. Other terms needing clarification are "depreciation","maintenance cost","other properties" and "tax bases", she said.
The draft act sets three rates of property and building tax -0.5% for commercial land and properties,0.1% for residential properties and 0.05% for agricultural properties.
The new law will replace the Building and Land Tax Act B.E.2475 and the Local Development Tax B.E.2508. It will reduce tax revenues for local authorities, who want the rates revised.
The FPO may also consider a progressive rate for high-value properties but it has yet to set a value. Residential units worth less than one million baht are expected to be exempt from the tax, but this could also change, depending on the situation when the tax is implemented, said Mr Somchai.
"The law is aimed at pushing landowners to utilise their land and to bring unused land plots into the market, because the department found that more than 90% of Thais hold less than one rai on average while the other 10% hold more than 100 rai on average," he said.
The office will carefully define "unused land" as many owners try to have unused land categorised as agricultural plots, which qualify for the lowest tax rate, said Mr Somchai.
For example, a piece of land would be defined as an agricultural plot when a certain proportion - possibly 75%is used for growing crops. Currently,some landlords try to avoid tax by growing a few trees on a large plot and claiming it as agricultural land or a public park.
Collections of taxes under the new law should start in 2012, because the Treasury Department has so far only appraised 6 million out of 31 million plots, said Mr Somchai. If the department cannot complete its task by 2012,tax will be collected according to blocks of land.
Developers are urging the office to review tax on land banks for future development. They say they cannot develop projects on all their land plots at the same time without creating an oversupply in the market.
The government should clarity the definition of several words in the bill to prevent the kind of disputes that currently arise over the collection of household tax, said Dr Supalakana Pinitpuvadol, a lecturer at Chulalongkorn University's faculty of law.
For example,"building or other building" in Article 5, which covers rafts,should clarify which rafts are included - rafts in resorts, rafts on rivers used for accommodation or rafts in theme parks, she said. Other terms needing clarification are "depreciation","maintenance cost","other properties" and "tax bases", she said.
UK FINANCIAL WATCHDOG CHIEF BACKS BANK TAX
The head of Britain's financial watchdog said in comments published on Wednesday that if needed he would back a multi-billion-pound tax onbanks as a measure to curb large bonuses for banking executives.
Adair Turner, chairman of the Financial Services Authority, said he would support taxes on the financial sector in a bid to prevent such bonuses for executives if they continued with excessive risk-taking.
Excessive risk-taking has been blamed for helping spark the global financial crisis and prompted a multi-billion pound taxpayer bailout of the British banking sector.
Lord Turner also criticised some activities of London's financial sector as "socially useless" and questioned whether it has grown too large.
"If you want to stop excessive pay in a swollen financial sector you have to reduce the size of that sector or apply special taxes to its pre-remuneartion profit," Turner said in an interview with current affairs magazine Prospect.
"Higher capital requirements against trading activities will be our most powerful tool to eliminate excessive activity and profits. And if increased capital requirements are insufficient I am happy to consier taxes on financial transactions...Tobin taxes."
A Tobin tax is a small tax on foreign exchange transactions, originally proposed by American economist James Tobin in the 1970s to discourage speculative trading.
Turner said a tax on the millions of transactions in the sector would cut banks' profits and reduce the pool of money available for bonuses.
He said the level of pay in the sector may be caused by "over-simplistic financial deregulation", describing this as the "really fundamental question".
"This is not a question that any of the politicians have focused on but I think it's an important and legitimate issue of public concern," he said.
Turner's comments were published yesterday on the front pages of several British newspapers.
Aides to Britain's finance minister Alistair Darling told the Financial Times that such taxes were not under consideration.
The comments come after the FSA earlier this month outlined new rules on bonuses for banking executives, unveiling a new code of practice that will come into effect from 2010.
Analysts argue that large bonuses, particularly in Europe and the United States, damaged the ability of leading bank executives to take well-judged business risks in the run-up to the meldown.
Adair Turner, chairman of the Financial Services Authority, said he would support taxes on the financial sector in a bid to prevent such bonuses for executives if they continued with excessive risk-taking.
Excessive risk-taking has been blamed for helping spark the global financial crisis and prompted a multi-billion pound taxpayer bailout of the British banking sector.
Lord Turner also criticised some activities of London's financial sector as "socially useless" and questioned whether it has grown too large.
"If you want to stop excessive pay in a swollen financial sector you have to reduce the size of that sector or apply special taxes to its pre-remuneartion profit," Turner said in an interview with current affairs magazine Prospect.
"Higher capital requirements against trading activities will be our most powerful tool to eliminate excessive activity and profits. And if increased capital requirements are insufficient I am happy to consier taxes on financial transactions...Tobin taxes."
A Tobin tax is a small tax on foreign exchange transactions, originally proposed by American economist James Tobin in the 1970s to discourage speculative trading.
Turner said a tax on the millions of transactions in the sector would cut banks' profits and reduce the pool of money available for bonuses.
He said the level of pay in the sector may be caused by "over-simplistic financial deregulation", describing this as the "really fundamental question".
"This is not a question that any of the politicians have focused on but I think it's an important and legitimate issue of public concern," he said.
Turner's comments were published yesterday on the front pages of several British newspapers.
Aides to Britain's finance minister Alistair Darling told the Financial Times that such taxes were not under consideration.
The comments come after the FSA earlier this month outlined new rules on bonuses for banking executives, unveiling a new code of practice that will come into effect from 2010.
Analysts argue that large bonuses, particularly in Europe and the United States, damaged the ability of leading bank executives to take well-judged business risks in the run-up to the meldown.
PROPERTY TAX TO CABINET NEXT MONTH
The Finance Ministry's Fiscal Policy Office will propose the property-tax law to the Cabinet again next month, after consideration was postponed this week.
The office's director-general Somchai Sujjapongse, at a seminar organised yesterday by the Thai Real Estate Association, Thai Condominium Association and Business Housing Association, said the law would help boost the income of provincial offices and that they could use it to develop communities.
Earlier, up to 80 per cent of community development funds came from the government, and only 20 per cent was covered by local administration revenue.
Meanwhile, he said, the government could use the law to manage land across the country, especially in cases where landlords own large tracts but refuse to do anything with them. Once the law is put in effect, most landlords will be forced to use their plots for farming or setting up businesses, he added.
Currently, at least 10 per cent of the population holds 100 rai each, while the remaining hold an average of 1 rai per person. Should the law go into effect, it would increase the tax burden on people holding large plots, so they will either be forced to reduce their property or use it to generate income, Somchai said.
According to the office, the property tax proposed will be divided into three levels. Tax for agricultural land will be no more than 0.05 per cent, that for residences 0.1 per cent and that for commercial land 0.5 per cent. But tax for undeveloped land will be 0.5 per cent for the first year, 1 per cent in the second year and will then be increased by an additional 1 percentage point every year.
Once the law is passed, the government will have to evaluate the 30 million individually owned plots across the country within two years.
So far, the Finance Ministry's Treasury Department has only evaluated 6 million plots.
The office's director-general Somchai Sujjapongse, at a seminar organised yesterday by the Thai Real Estate Association, Thai Condominium Association and Business Housing Association, said the law would help boost the income of provincial offices and that they could use it to develop communities.
Earlier, up to 80 per cent of community development funds came from the government, and only 20 per cent was covered by local administration revenue.
Meanwhile, he said, the government could use the law to manage land across the country, especially in cases where landlords own large tracts but refuse to do anything with them. Once the law is put in effect, most landlords will be forced to use their plots for farming or setting up businesses, he added.
Currently, at least 10 per cent of the population holds 100 rai each, while the remaining hold an average of 1 rai per person. Should the law go into effect, it would increase the tax burden on people holding large plots, so they will either be forced to reduce their property or use it to generate income, Somchai said.
According to the office, the property tax proposed will be divided into three levels. Tax for agricultural land will be no more than 0.05 per cent, that for residences 0.1 per cent and that for commercial land 0.5 per cent. But tax for undeveloped land will be 0.5 per cent for the first year, 1 per cent in the second year and will then be increased by an additional 1 percentage point every year.
Once the law is passed, the government will have to evaluate the 30 million individually owned plots across the country within two years.
So far, the Finance Ministry's Treasury Department has only evaluated 6 million plots.
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