Proposed Amendment to the National Competitiveness Enhancement for Targeted Industries Act
The National Competitiveness Enhancement for Targeted Industries Act, B.E. 2560 (2017) (“Act”), which came into force on February 14th, 2017, established the Commission on National Competitiveness Enhancement for Targeted Industries Policies (“Commission”). This Commission, chaired by the Prime Minister and consists of various key government officials. The duty of this Commission is to drive policies aimed at enhancing specific industries.
The Act grants the Commission the authority to make announcements and prescribe targeted industries. The Announcement No. 1/2560 (2017) on the Investment Promotion Rules under the Act was published specifying ten target industries which are the modern automotive industry, smart electronics industry, quality tourism industry, agricultural and biotechnology industries, high-value food processing industry, robot industry, aviation industry, biofuel and biochemical industry, digital industry, and comprehensive medical industry.
The primary objective of this Act is to provide funding for the business operators in the aforementioned targeted industries as determined by the Commission whom a promotion certificate is granted from the Thailand Board of Investment.
However, there is one critical issue in need of amendment related to the funding mechanism as outlined in Section 29 of the Act. Section 29 specifies that the fund comprises several sources, which are (1) an initial capital allocation by the Government (amounting to 10 billion THB), (2) subsidies from the government, (3) donations or gifts of money or property, (4) money or property vested in the fund, and (5) interest or returns on the fund’s assets. Importantly, the Act does not require funds allocated to the C mission to be remitted back to the Treasury as state revenue. This section of the Act does not establish a legal authority for the government to consistently allocate a portion of taxes collected to adequately fund the Commission.
The proposed amendment to Section 29 seeks to introduce a new provision, Section 29(6). This amendment would empower the Minister of Finance to allocate funds from increased taxation as deemed necessary. Such an amendment is crucial as it would bolster the financial resources available to the Commission, thereby mitigating the adverse effects of the increased tax rates imposed in accordance with the Global Minimum Tax of 15%. This tax is levied upon large multinational enterprises with revenues of not less than 750 million EUR (equivalent to approximately 28 billion THB) generated within the jurisdictions of the countries that are members of the Organization for Economic Co-operation and Development (OECD), including Thailand.
In conclusion, the proposed amendment to the Act, specifically the inclusion of Section 29(6), is a vital step towards ensuring the sustained growth and competitiveness of the targeted industries. By allowing the Minister of Finance to allocate funds from increased taxation, these industries will receive enhanced assistance in navigating the challenges posed by the Global Minimum Tax and fostering their continued development.
Author: Panisa Suwanmatajarn, Managing Partner.
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