The government’s tax collection remains strong even during the COVID-19 pandemic, reaching more than $2.25 billion in the first nine months of this year, according to a report by the General Department of Taxation (GDT).
The report shows that the amount increased 3.71 percent compared with the same period last year and was 78.10 per cent of annual target of tax collection.
However, the GDT collected just $162.22 million in September, a decline of 18.75 percent compared with last year.
General Director of GDT Kong Vibol said COVID-19 had a negative impact on tax revenue, especially for some important sectors.
“Even though the COVID-19 pandemic has negatively affected some important businesses and the economy as a whole, the GDT needs to strengthen its action plan to support the tourism sector, aviation, agriculture and manufacturing to ensure economic growth,” he said.
The government has currently offered a tax exemption for tourism-based businesses such as hotels, restaurants and the aviation industry because the sectors have been hard-hit by the pandemic.
“[We] need to boost tax collection in some sectors, which remained healthy despite COVID-19,” he said.
Vibol said in order to ensure effective revenue mobilisation and make
it manageable, the GDT continues to urge strengthening collection of VAT via the e-VAT system and provide tax officers with the training to be ready for the implementation of tax on capital gains, starting from January.
Group Chief Executive Officer of corporate finance firm Investment Management Anthony Galliano said that in the currently depressed economic climate with the key pillars of the Kingdom’s economy, tourism and garments, debilitated, the GDT has performed commendably given the challenging circumstances.
“Credit is also due to the Royal Government in managing to keep the country substantially open and avoiding lockdowns, which have decimated other countries that have enforced long closure periods,” he said.
Galliano said, however, the GDT’s accomplishments have also come at a cost to some businesses, with a substantial proliferation in audits, which, in particular, have burdened struggling businesses in a troubled economic environment.
“While some sectors are fortunately and rightly benefiting from tax relief, other business sectors are experiencing a very challenging economic environment with an escalation in audits, which is not constructive given the times,” he said.
He said there has been a sequential series of notable successes by the GDT, timely intervention in providing Ptax incentives to support distressed sectors and in digitalisation, such as e-filings and tax registration through the Online Business Registration System.
Another commendable initiative was the introduction of capital gains tax to be implemented in 2021, greatly widening the tax base and category of taxes, in a very fair and balanced manner, he added.
“However, there remains low-hanging fruit to increase tax collection revenue.”