The Finance Ministry will delay plans to eliminate an exemption on interest income earned through savings deposits after the Bank of Thailand promised to enact more stringent measures in overseeing financial institutions.
The Revenue Department recently discussed the issue with Finance Minister Apisak Tantivorawong.
Both sides agreed the ministry should delay eliminating the exemption after the central bank said there were measures available to supervise commercial banks which attempt to help customers avoid paying the compulsory 15% withholding tax deducted from deposit interest income, said the department's director-general Prasong Poontaneat.
The delay also takes into account any potentially negative effects on depositors, said Mr Prasong.
The central bank said it has coordinated with the Finance Ministry and the Revenue Department on investigating a commercial bank that allegedly helped customers avoid paying tax on interest income.
"The Bank of Thailand acknowledges such undesirable behaviour was committed by a commercial bank and is looking into the incident to see if it is only one case at a particular bank, branch, or if a certain bank official is offering a special service to major clients," said Ronadol Numnonda, assistant governor of the supervision group at the central bank.
The central bank will also order commercial banks to strictly comply with tax regulations, he said.
The move came after Mr Apisak said some officials at commercial banks had been helping their customers avoid paying tax by exploiting the 15% withholding tax exemption on interest income of up to 20,000 baht a year.
The tax waiver, which the Finance Ministry intended as an incentive to encourage people to save more, has been used by the rich to avoid paying taxes, he said.
