The Ministry of Finance prescribes a 1.5 times corporate income tax reduction in exchange for the adjustment of minimum wage to THB 400 a day to ease operators, to be complied with on October 1, as well as a 1% reduction in employer’s social security contribution for 12 months starting from October, 2024 to October, 2025, asserted the Ministry of Labor.
The Revenue Department remarked they are ready for implementation. However, the feasibility of 1.5 times reduction following the minimum wage adjustment shall remain in consideration on a case-by-case basis.
It is worth noting that this reduction does not outright cut the current corporate income tax standing at 20%, but will be calculated based on an increase in employee expenses instead.
Further tax reduction in support of employers who carry out skilled labor training was also proposed by the Department of Skill Development, in connection to seminars held at various establishments throughout 2024 to conduct training for almost 4 million personnels.
Mr. Korapat Worachet, Director of Investment Research and Service of Krungsri Securities PCL or KSS sees the outweighing benefits in private sectors. Consequently, the adjustment would result in a 20% increase in labor cost, which is compensated by a 30% increase in profit from the tax reduction. Other benefits include higher corporate profit overalls, more consumption by employees, improvement in consumer good economy and an increase in state revenue by means of value-added tax.
In terms of stocks, gains can be anticipated among various business groups. Namely, retailers such as CP All (SET: CPALL), Berli Jucker (SET: BJC), and CP Axtra (SET: CPAXT). Simultaneously, the tax reduction measure would bolster hoteliers e.g., the Erawan Group (SET: ERW) and Central Plaza Hotel (SET: CENTEL), along with several restaurateurs such as MK Restaurant Group (SET: M), Zen Corporation Group (SET: ZEN), and After You (SET: AU). Constructors, for instance, Sino-Thai Engineering and Construction (SET: STEC) and CH. Karnchang (SET: CK) can also look forward to the above merit.
