Reforming Thailand's tax system using technology: Thailand's last resort (Part 2).

The previous article presented the current state of tax collection in Thailand, the structural problems of the Thai tax base, and the use of technology to improve tax collection efficiency. This article is the conclusion of the proposals for using technology to reform the Thai tax structure.

Case studies from abroad.

To facilitate practical implementation, we can consider the successful examples of tax reform technology from two Asian countries, as follows:

1.Singapore Using technology to link government data for revenue assessment.

Singapore is another country that is advanced in e-government and whole-of-government integration. In the field of taxation, the Inland Revenue Authority of Singapore (IRAS) has implemented the concept of "requesting data from a single source and sharing it across the state" in its Auto-Inclusion Scheme (AIS) since 2018. This eliminates the need for citizens to manually enter income information; employers and financial institutions send salary, interest, dividend, etc., data of citizens directly to IRAS.

IRAS then automatically incorporates this information into pre-filled tax forms. In other words, income from sources where the government has data, such as salaries of employees in large companies, land rental information, etc., will be preloaded into the tax system. Taxpayers do not need to fill it in themselves, significantly reducing the burden and errors.

Currently, large employers in Singapore are required to participate in submitting AIS data annually, effectively eliminating the need for their employees to file separate payroll details. This saves time and effort for both employees and accounting departments. Furthermore, the IRAS offers a broader Taxpayer Information Summary (TIS) system that encompasses all types of taxpayer income (including freelance income, rental income, interest, etc.) to provide more comprehensive automated tax assessments.

As a result, filing personal income tax in Singapore has become easy and fast. Many people simply review the pre-written forms, click confirm, and the process is complete—all online through the myTax Portal, which uses SingPass (the government's central login system) for identity verification.

Beyond individual income, the Singapore government is also encouraging businesses to directly connect their accounting systems to the IRAS via API for automated financial statement and corporate tax filing (Seamless Filing Form Software – SFFS project). Businesses can submit tax data from their own accounting software to the IRAS in a few clicks, reducing redundant tax form completion, which significantly decreases errors and processing time.

Lessons from Singapore : Linking data between government agencies, such as the Revenue Department and the Department of Labor, banks, etc., provides the government with a clearer and more complete overview of taxpayer income. This allows for more accurate and fair tax assessments and also reduces the reporting burden on citizens and businesses. Citizens are also pleased that this simplifies the process, as the government should utilize existing data effectively and avoid requiring citizens to fill out forms repeatedly.

This is a principle that Singapore has implemented well, along with the development of digital infrastructure such as SingPass and MyInfo (a system for sharing personal information that citizens authorize various agencies to use to fill out forms). This makes tax and other government services seamlessly interconnected, reducing opportunities for corruption or evasion because data is readily available across multiple agencies. If false information is reported in one place, it can be easily detected in another.

2.South Korea Real-time VAT system and digital tax receipt system.

South Korea is a prime example of a country that extensively utilizes digital technology in taxation, particularly in value-added tax (VAT) collection and cash transaction control.

As mentioned in section 3.4, South Korea has implemented an electronic tax invoice system since 2011 and has continuously lowered the thresholds. Currently, almost all businesses are in this system. Businesses with annual sales exceeding 80 million won (2 million baht) must comply. Every tax invoice is sent for confirmation to the central NTS (National Tax Service) center before reaching the customer, and sales data is recorded instantly. As a result, VAT avoidance is virtually impossible. South Korea's VAT gap has significantly decreased, meaning that VAT collected is closer to what it should be based on actual economic conditions.

The report states that this system has significantly increased tax compliance rates and also improved internal business efficiency through digital documents, reduced processing times, and faster tax refunds, among other benefits. South Korea is therefore considered a model for Continuous Transaction Controls (CTC) in digital tax management, which many countries are emulating, such as the Philippines, which plans to follow the Korean system by 2026.

Cash receipt system (Cash Receipt System – CRS) : To collect taxes on retail and service sectors that often involve large amounts of cash transactions, the South Korean government launched the Cash Receipt System (CRS) in 2005. Consumers can request receipts from stores, with the stores recording their identification number when issuing the receipt—this could be a phone number, ID number, or a dedicated Cash Receipt card. Sales data is then sent daily to a central database via authorized service providers. Consumers receive year-end tax credits, income tax deductions, or a partial VAT refund on purchases with receipts.

This has led Korean citizens to seek receipts for their own benefit, pressuring all stores to register with the CRS system, install equipment, or use receipt issuance software connected to the network. Registered stores display a sticker at their doorstep, letting customers know that receipts are issued. Currently, even all credit card readers in Korea have a built-in cash receipt function, making cash receipt issuance virtually integrated into every retail transaction. The cash-on-delivery system prevents leakage and, more importantly, fosters transparency among both merchants and consumers.

Overall success : South Korea has a virtually 100% real-time, verifiable tax system. Every invoice and receipt, from both business-to-business (B2B) and business-to-consumer (B2C) transactions, is reported electronically to the government. This has resulted in a significant reduction in VAT evasion and provides the government with vast amounts of data for policy analysis.

Recently, South Korea's Ministry of Finance began using data analytics from e-Invoices in macroeconomic policy planning. However, South Korea faced initial challenges, such as the high investment cost of the system for SMEs and occasional system outages. The government addressed these issues by enlisting private e-Invoice service providers to assist SMEs and improving network stability, resulting in significantly fewer problems today.

Lessons from South Korea : This demonstrates that the use of technology for rigorous real-time tax reporting enforcement can dramatically increase compliance with the law, even with high initial investment and potential short-term burdens for businesses. In the long term, both the government and businesses benefit from a transparent and efficient system, shifting the paradigm from "collecting and detecting later" to "collecting data immediately and preventing evasion in advance." Thailand can partially apply this, such as e-invoice systems and real-time POS data transmission for certain business types.

Policy recommendations for Thailand.

Based on the analysis of the situation and international lessons from the two Asian countries mentioned above, policy recommendations for reforming Thailand's tax system using technology can be summarized as follows:

1. Expand the taxpayer base and VAT's impact on the informal economy.

The government should take proactive measures to bring people and businesses in the informal sector into the tax system, such as:

– Implement the “Micro VAT” concept, collecting a small VAT rate, such as 1%, from small retailers with sales below the previous threshold of 1.8 million baht per year. This would bring over a hundred thousand small businesses into the tax system and generate billions of baht in additional revenue without placing an excessive burden on SMEs. Furthermore, it would help small businesses grow and overcome previous limitations (without having to split up their businesses to evade VAT).

- Lower the tax registration criteria tied to sales volume, or empower the Revenue Department to consolidate businesses that intentionally split up to evade regulations into a single entity for VAT registration consideration (closing the loophole of "company splitting" to avoid taxes).

– Consider incentive measures to encourage voluntary participation in the system, such as a transitional tax amnesty program that waives penalties/fines for those who voluntarily pay back taxes, or reward systems in the form of accumulated points for future use. Welfare benefits could include subsidized loans, healthcare access, education, and prize draws for outstanding taxpayers based on their tax invoices or tax registration numbers, in order to reduce negative attitudes towards taxation and create new positive values ​​in society.

2. Upgrading the Revenue Department's IT system. (Digital RD) or the Ministry of Finance's:

Accelerate investment in and development of the IT infrastructure of the Revenue Department, or all tax collection departments under the Ministry of Finance, to fully support modern missions in accordance with the "SMILE RD" approach, which emphasizes Simplification, Modernization, Inclusivity, Legality, Efficiency, Responsiveness, and Digitalization in particular.

– Create a one-stop service portal and centralized database, linking all types of tax information and data from other government agencies (e.g., income data from social security/Department of Labor, property data from the Land Department, transaction data from the Bank of Thailand, etc.) to provide both officials and taxpayers with easy and comprehensive access to information in one place.

– Maximize the development of automated tax filing/payment systems: For individuals, the "Pre-filled Tax Return" concept should be implemented, where the government prepares the tax forms and taxpayers only need to verify/confirm them (e.g., retrieving salary and withholding tax information from employers, interest from bank deposits, child and spouse deductions from the civil registry, etc., and adding them to the taxpayer's My Tax Account system). Furthermore, expand e-Withholding Tax, e-Donation, and e-Stamp services to reduce paperwork burdens.

- Strengthening the Department's AI and Big Data capabilities: Invest seriously in data infrastructure and data science personnel to analyze large databases from various sources (banking transactions, online platforms, international data, etc.). Focus on using AI for risk scoring to screen high-risk individuals (e.g., those with unusually high income flowing through their accounts but low tax payments) for referral to auditing units for further follow-up.

Simultaneously, AI chatbots and automated question-answering systems should be developed to make them easier for citizens to use, creating a better experience when interacting with government agencies, reducing confusion and hesitation when filing taxes, and eventually being implemented across all tax departments to ensure complete interconnectedness.

3. Using technology to close loopholes in tax evasion.

Enact regulations or policies to make business transactions more digital and verifiable by...

– Promote the standardization of e-Tax Invoices and e-Receipts. – Initially, it may be mandatory for large businesses and those already registered in the VAT system (based on the Director-General's announcement under the Revenue Code, which currently allows for voluntary use). Once the system is ready, it can be expanded to wider enforcement, similar to South Korea, by providing a central government platform that offers free electronic tax invoice issuance/sending services for small businesses (similar to South Korea's e-Sero system, which allows small businesses to issue invoices one by one via the web for free).

– Promote the use of POS systems and point-of-sale (POS) systems that are linked to tax data. – Initially, it may not be mandatory immediately, but rather through financial support (e.g., tax credits or subsidies for SMEs that install POS systems/accounting software linked online to the Revenue Department) to encourage small retailers to adopt digital sales recording systems. Once there are enough users and supporting infrastructure, consider mandating the use of linked POS systems in high-risk business sectors such as gold shops, construction material stores, or businesses with high transaction volumes that have previously been vulnerable to the issuance of fake invoices.

– Establish a central tax information system that integrates tax payment data for each taxpayer from all sources (income tax, VAT, duties, customs, etc.) and develop an automated cross-check system to detect irregularities (e.g., income reported to the Revenue Department does not match asset ownership shown in other databases) in order to prevent and suppress advanced forms of tax evasion.

4. Revise the tax rate structure simultaneously.

While the question focuses on increasing the number of taxpayers, sustainable tax reform should also consider the tax rate structure in order to reduce social resistance and stimulate the economy simultaneously. These include:

– Consider reducing personal and corporate income tax rates during certain periods – for example, the Ministry of Finance's proposal (late 2567) to reduce corporate income tax from 20% to 15% to promote competition following the implementation of a Global Minimum Tax, and to reduce the top personal income tax rate from 35% to 15% to incentivize high-earning individuals to stay abroad and attract foreign experts. Although this measure reduces rates, if the tax base broadens (more people pay taxes, increasing revenue), total revenue may not decrease significantly, and it will still create an incentive for people to voluntarily pay taxes (because the rates are not so high that they would want to evade them).

– Consider a gradual increase in VAT – Thailand's VAT of 7% is very low in the international context. In order to increase revenue to meet the needs of welfare in the future, an increase may be unavoidable. The Minister of Finance has stated that if VAT is raised to near international levels, the government will have more funds to assist low-income earners and develop the country, reducing inequality.

However, raising VAT must be done cautiously. It is recommended to: 1. Implement it only after sufficient expansion of the tax base has been achieved and the economy is ready; 2. Communicate concrete ways the increased revenue will be used to gain public acceptance; and 3. Implement concurrent relief measures for low-income earners (since VAT is an indirect tax that impacts the poor more significantly), such as using the state welfare card system to offset the VAT burden or compensating SMEs through tax credits or increased tax invoices.

5. Build long-term tax knowledge and discipline.

Technology is most effective when the public has a positive attitude and a good understanding of taxes. Investment in tax education should begin at a young age, such as incorporating content on good tax citizenship into the curriculum (Japan and the US teach both theory and practice of taxes from elementary school). Furthermore, activities promoting "receipt discipline" could be implemented among the public, such as contests or prize programs based on tax invoices/receipts, similar to those in Taiwan or other countries where consumers can submit receipt numbers for prizes.

Rewarding those who request receipts would transform the public into informal scrutinizers of businesses (since everyone wants a reward and therefore requests a receipt every time), providing the Revenue Department with increased sales data. Furthermore, proactive public relations should highlight the benefits of tax money returning to society (taxes used to build roads, hospitals, schools, etc.) and demonstrate transparency in the use of funds, such as publicly reporting on the results of projects funded by tax money. This builds trust between the government and the public. When people believe their tax payments are not wasted but genuinely benefit the nation, compliance will naturally increase. This can be achieved through technological systems for transparency and monitoring.

6. Taxpayer benefits and entry into the system.

Consideration should be given to a tax amnesty program with conditions for participation and tax payment. Incentives should also be offered to taxpayers who request tax invoices for every purchase, such as accumulating points for future government welfare benefits, expedited VAT refunds within 15 days, tax cards for other tax payments, and temporary VAT refund transfers for those affected (e.g., 5 years, initially on a voluntary basis). Furthermore, access to low-interest loans from state or private banks and various other government assistance programs should be provided.

7. Change Management (Change Management)

Major tax reforms inevitably face friction and obstacles. The government should have a good plan for managing the change, including:

– Assistance for low-income individuals and SMEs in the event of a VAT increase will be provided through cash transfers in appropriate amounts, but all recipients must use this money through the e-Invoice or E-Payment system of the Revenue Department only. This also includes limited benefits and dividends within the first 5 years.

– Establish a special task force with representatives from the government, business, and the public to jointly design the details of the measures, listen to concerns, and refine the measures to minimize negative impacts.

– Establish an appropriate transition period, such as testing the e-Invoice system with volunteers first, allowing SMEs time to adapt/subsidizing POS machine costs in the initial phase, and conducting pilot projects in selected provinces or industries to address problems before scaling up nationwide.

– Updating supporting laws – Some approaches may require amendments to the Revenue Code or other laws, such as data exchange between agencies, new penalties for not using the e-Invoice system, and personal data protection when the government uses Big Data/AI, etc. Drafting legislation and clear communication are necessary.

– Training Revenue Department personnel – Familiarizing officers with new digital tools and shifting their roles from traditional data processing to more analytical tasks. This aims to alleviate officers' concerns about being replaced by technology by highlighting that the tools will assist and enhance efficiency, not replace jobs.

For technology-driven tax reform to be successful, it requires decisive policy action from national leaders. This endeavor may not yield immediate results and involves significant investment, but in the long term, it will transform Thailand's fiscal landscape, making it more stable and responsive to the digital economy. Successfully increasing the number of taxpayers and expanding the VAT base will help bring Thailand's tax-to-GDP ratio closer to its potential of 18-20%, reducing the future budget deficit and public debt.

Furthermore, it enhances the country's governance in the eyes of investors and the global community, because a transparent and fair tax system is the foundation of sustainable development. Thailand's policymakers should therefore prioritize and accelerate this change for a future where the country can generate sufficient revenue, be self-reliant, and its citizens can live together based on true tax fairness.

Issuing a royal decree by a government with an outsider as Minister of Finance would be the only solution for Thailand at this time to lead the country towards sustainable prosperity in the future. Because no matter which political party leads the country, they will certainly need this tax reform law. Every party must consider tax reform as national reform, and every political party and the public must consider it a national agenda to ensure its success.

Technology-based reforms must be comprehensive, encompassing legal amendments, technology investment, communication and understanding building, taxpayer incentives and assistance for those affected, and periodic evaluation and adjustments. The process should begin on a voluntary basis before becoming mandatory, allowing a three-year grace period before full implementation.

If successful, Thailand will overcome its narrow tax base and insufficient government revenue, moving towards a modern tax system that collects more taxes through fairer and more efficient methods, and the Thai economy will undoubtedly achieve sustainable prosperity.

Note:: The above article has been compiled by the author. The AI ​​solutions used by ChatGPT, Copilot, and Perplexity are referenced using the following sources:

• Thai PBS. Assoc. Prof. Athipat Mutitajaroen. (2565). "Taxes are inevitable." Why must everyone pay taxes? The Active –
• (2567). 'Kulaya Tantitemit', Director-General of the Revenue Department, promotes “SMILE RD” to leverage Big Data and expand the tax base both vertically and horizontally.
• (2568). Revive the 'Micro VAT' system, expecting an increase in income of 4,000 million, hoping to expand the personal income base.
• iTAX Media. (2567). Minister of Finance proposes tax reform, VAT increase and income tax reduction.
• (2024). Guide to IRAS'Auto-Inclusion Scheme-Singapore
• European Commission. (2019). Estonian electronic tax filing system (E-Tax)
• (2023). E-invoicing in South Korea: The e-Tax Invoice System
• Kostiainen & Satria (2020). A Roadmap for Digitalization of Tax Systems: Lessons from Korea. IDB