Tax deductions for contributions to political parties are estimated to cost the government 2.1 billion baht a year in forgone revenue.
But the Revenue Department believes that the forgone revenue is worthwhile because the contributions could help strengthen the country's political party system, said a source at the tax-collecting agency.
The tax deductions allow people to openly show their support to particular political parties and encourage politicians to act as people's representatives, the source said.
The tax-collecting agency amended the Revenue Code to enable income earners who contribute to political parties to claim a tax deduction of up to 10,000 baht and juristic entities up to 50,000 baht per tax year.
The amended Revenue Code, for which a third public hearing runs through Jan 9, is to comply with Section 70 of the 2017 charter, stipulating that those who contribute to political parties can deduct income tax.
At present, the department lets taxpayers only donate income tax refunds to political parties.
The department considered it appropriate to permit both individuals and corporate taxpayers to claim political contributions and donations as expenses for income tax deductions because political parties play an important role in a democracy, the source said.
