The Finance Ministry is preparing to review tax deductions and exemptions as part of efforts to address concerns over public debt raised by credit rating agencies.
According to Finance Minister Ekniti Nitithanprapas, the ministry is scheduled to review the medium-term fiscal framework (MTFF), which serves as the government’s fiscal discipline guideline, in November.
Several issues are under consideration, including adjusting the criteria for various tax deductions (which do not require amendments to the Revenue Code), reviewing previously granted tax exemptions, and promoting the use of digital systems for tax filing.
‘Although we have not yet made digital filing mandatory, I believe transitioning to a digital system – while allowing exceptions for those with limited access – will significantly expand our tax base and demonstrate the government’s fiscal discipline,’ Mr Ekniti said on Thursday.
He said current deductions are too scattered and lack a clear framework. The ministry must set an annual ceiling for total deductions to define a clear maximum limit, he said.
The review is expected to be completed by November, and a study team is already working on it, said Mr Ekniti.
Improving tax deductions and abolishing certain tax exemptions would increase government revenue by a considerable extent, he said.
Regarding proposed revisions to tax deductions, Mr Ekniti said he was interested in the Stock Exchange of Thailand’s proposal for an Individual Saving Account system.
Under this approach, individuals are allowed to choose their own investments within a specified limit – whether in stocks, bonds or other instruments. This creates a personal investment framework, eliminating the need to constantly launch new products such as long-term equity funds (LTFs), retirement mutual funds or ESG funds, which often overlap.
He said all these could be combined into a single system, giving people greater flexibility and choice: some may prefer to invest in government bonds, others seeking higher risk can choose equities, while others may invest abroad.
Investors would have greater freedom to select products suiting their preferences and risk appetite.
‘In the past, when the LTF scheme was introduced, everyone rushed to buy units just for tax benefits, but later many of those funds suffered losses. If people are allowed to choose where to invest independently, it would better match their interests and risk preferences,’ said Mr Ekniti.
These reforms are part of the MTFF revisions scheduled for November, aimed at addressing the government’s debt overhang, he said.
Rating agencies adjusted Thailand’s outlook due to three main concerns, including political issues, which the minister said are beyond the ministry’s control.
The second issue is Thailand’s economic growth potential, which the government aims to strengthen by focusing on human capital development and investment in new industries, such as data centres, digital technology and artificial intelligence (AI), areas in which Thailand can compete globally.
The third issue is public debt and the fiscal deficit. He said the government intends to examine the government’s revenue structure to identify where the gaps or leakages lie, as well as review expenditures to determine which areas are overspending.
The administration also wants to emphasise investment spending, said Mr Ekniti.
These steps are likely to be implemented within four months, he said.
The Revenue Department provides several tax deduction categories, covering both personal deductions and investment-related deductions supported by the government.
Examples include investments in Super Savings Fund units, which allow taxpayers to deduct up to 30% of their assessable income, not exceeding 200,000 baht a year; investments in ESG funds, deductible up to 30% of assessable income, not exceeding 300,000 baht; mortgage interest, deductible up to 100,000 baht; and life insurance premiums for policies with a minimum term of 10 years, deductible for the actual amount paid, not exceeding 100,000 baht.