Bangkok--29 Oct--PwC Thailand
Thai taxpayers should prepare to face a stricter compliance reviews as falling tax revenues increase pressure on the government to take action, PwC Thailand says.
Authorities may consider more severe audits as tax collections drop due to an economic downturn and recent tax cuts, according to Somboon Weerawutiwong, Lead Tax Partner at PwC Tax & Legal Consultants Ltd.
Companies and individuals should take preventive action with a self-review that can spot and assess tax risks, according to PwC, part of the world's biggest network of corporate audit, tax and advisory firms.
"Conducting a self-review is important to lower the chance that an audit uncovers a compliance risk," Somboon said at the 17th annual conference: Maximise Shareholder Value 2016 – Preparing Yourself for a Compliance Review by the Authorities.
"It's crucial for Thai taxpayers to undergo a tax health assessment and truly understand the changes required, rather than waiting for questions from the tax authorities," Somboon said.
Government revenue in the fiscal year through September reached 2.21 trillion baht, missing the budgeted target by about 5% due to a sluggish economy and low oil prices, according to Thailand's Fiscal Policy Office. Tax collections from the Revenue Department were 1.73 trillion baht, 12% short of target. That increases the risk of more tax audits and delays to tax refunds.
A tax self-review should cover changes from the new draft transfer pricing law and a new customs act, Somboon said. On top of that, it's crucial to prepare documentation on VAT and international payments – two common points of scrutiny during an audit.
A self-review will lead to overall healthier tax practices that help an individual or company in the long run, Somboon said.
"Tax payers will then able to avoid extra costs from non-compliance with current tax laws and regulations," he said.
As regulatory landscapes continue to evolve, a company's tax function will play a more important role in driving the organisation forward. Regulators demand transparency, necessitating clear and thoughtful communications with public stakeholders about corporate contributions to the communities where they do business.
Moreover, global tax information reporting requirements such as Base Erosion and Profit Shifting – so called 'BEPS' – and similar transparency initiatives are set to grow exponentially. These will have a material impact on a company's operations.
Taxpayers that are prepared will be able to avoid compliance risk even as authorities increase enforcement. That will put them in a position to thrive once the economy rebounds.