WHAT better a circumstance in which to write: I just got up from a pleasant Sunday afternoon nap, took a look outside and promptly forgot about thoughts of taking a walk across our neighboring university campus while listening to my music with my wireless earphones connected to the 37 gigs of 'my music' on my phone. No siree, a slow, steady, moderately-long, healthy walk in the rain may be air-pollution free but darn it - it's much too wet for me - hey, it's a downpour outside!

So, it is miserable outside and I have nothing planned for the next hour or so inside and it is the end of the month (it is the final Sunday in April, to be exact)…..the perfect time to begin the third from last article prior to retiring from a 37 year part time tax writing career. I was going to comment upon tax (and government) matters in Thailand, in the PRC and in the U.S. in that order….unfortunately, that section I wrote about U.S. tax matters has somehow disappeared from both my computer but lucky me - I actually backed it up to a USB drive backup so while I was resigned to changing this to a two jurisdiction article, we're back to the original, three jurisdictions. If I would only back up all the time so many of my problems would disappear!!!

To the 'Land of Smiles, first. On 19 April the government announced a new individual income tax structure. Foremost in the reformat is the tax bracket set up and the changes in the upper levels. Here it is:

But wait, there's more! Personal allowances double from 30,000 baht to 60,000; Expense allowance deductions which used to be set at a maximum of 40% of income up to 60,000 baht now goes up to 50% and a 100,000 baht maximum; and there's the Children's exemption/allowance too - through the end of the current tax program, there's a 15,000 baht per child exemption with a maximum of 3 exemptions allowed plus a 2,000 baht educational allowance. New will be a 30,000 baht per kid exemption and unlimited children - will this correct a flaw in the system, thus accounting for the correct number of children in Thailand or will it be an excuse to have more kids? Only time will tell. Alas, by the time probably needed to tell, there's likely to be an entirely new program in effect.

Can this truly benefit the middle class as the government claim if only 20,000 tax filers fall into the highest bracket? The fact also remains that Thailand currently still has a 28% maximum corporate tax bracket and it would not be a surprise to assume that that latter rate, favorable to a 35% maximum individual income tax rate will result in some income 'shifting' going on.

There's no hope for you if you were hoping for this to take effect now (although I can't really think of that many beneficiaries) - it does not go into effect until 2017 when, for those optimistic, there will be a newly elected government replacing the military junta and just perhaps they'll be coming up with another and perhaps a bit more imaginative change to spur on a very sputtering economy. As I previously stated (not a typo!), only 20,000 tax filers out of 10.3 million filers actually fall into that 35% bracket. Only 20,000 filers in Thailand make over $US139,000 a year? Something's wrong - that's logically far too few. But we are not here to audit the audit capabilities of the Thai tax bureaucracy.

And that brings us to another bureaucracy with judgement (or lack thereof) that is worthy of mention in this article - why we're speaking of the Immigration Bureau of Thailand which, earlier this month started giving out a new form entitled 'Record of Foreigner Information'. This one is geared for those longer-term foreign residents of Thailand up for visa renewal. Obviously there is nothing wrong with new forms if they are easier to fill out and increase the efficiency of the system (any system!) but Pol Maj Gen Chatchewan Wachirapaneekhun, deputy chief of the bureau, the proud 'father' of the form believes it useful for Immigration to now know which clubs, restaurants, shops, hospitals and other places the applicant frequents. Not only that, the form has the audacity to ask for bank account numbers, drivers license numbers, car and motorcycle ownership details. Why? What purpose does any of this serve for Immigration purposes. And, of course, how many really want to feed the data base of a system that could easily be hacked with information like this?

Sure, this one was halted before too much outcry about it came to fore but still, things like this should be mentioned - true, they've little to do with tax but could possibly impact all visa applicants had it gone into widespread effect. Hey, Pol Maj Gen Chatchewan, hire a hacker - you'll get far more information at a far lower cost without stirring the public anger pot!

Bloomberg in China

On April 22d Bloomberg/Business Week reported that China is about to undergo its biggest tax overhaul in two decades when on the first of May, May Day (read into what you will about the significance of the term'May Day') the business tax will end and the VAT will become 'universal' in China as the final areas of endeavor, the construction industry, finance and the consumer service sectors will now have to contend with a VAT and not a business tax. This is a change but it is far from the biggest tax overhaul in two decades!

The business tax, in essence, has been a percentage tax on gross income, it came right off the top. The government proudly states that corporate payments will be reduced by 500 billion RMB this coming year because of the change to a system where you deduct prior taxes paid and only pay upon the value you add to the product you sell. That's fair but what if you are in a services field where there are no prior taxes to deduct; where the prior business tax was lower than the new VAT? The construction, property, finance and consumer service sectors now totally coming under the VAT umbrella will find some really big winners: those purchasing inventory previously VAT levied will get a massive break. Then there's the rate reduction for small businesses with less than 500,000 RMB in annual sales - they have paid a 5% tax - that'll now drop to 3%. Oh but pity the losers:

labor-intensive industry will suffer the irritation of hearing all about tax savings as they pay more because there is no VAT labor tax. And those other consumer service industry companies now falling under the VAT will likely have a rude awakening.

Overall, though a more unified tax structure of this nature will make it easier to implement other areas that do need attention. Eliminating the business tax will mean less revenue will come to the localities as the central government gets all the VAT. If you combine lost tax revenue with failing government invested manufacturing and the high percentage of non-performing loans that regional and local banks have within their portfolios, financial institutions that are probably the responsibility of the local government rather than the central government, there will be some proverbial rough waters ahead. Will there be a hard landing, a soft landing or, as Jack Ma thinks, no landing at all over the next couple of decades? Regardless of that outcome there has got to be some tax reorganization from top to bottom throughout the country within the next decade. Hopefully, this will create more emphasis upon developing methods of raising local revenues other than land sales. The real big changes to come in the future, though, will be to the individual income tax. The changes that the State Administration of Taxation will make over the next half-decade in this area will then warrant Bloomberg/Business News accolades…..but reader be ware: the State Administration of Taxation is using the U.S. Internal Revenue Service as a role model!!!

O.K. U.S. tax talk time…..

To conclude this month's article I am going to 'critique and highlight' an in-depth article written by Jackie

Calmes and pubished in the 21 April New York Times. The article: "I.R.S. Fights Back Against House Republicans' Attacks' does not really go into the I.R.S.'s actions as much as it discusses the anti-tax 'wrath' of the Congressional Republicans against the IRS, cutting its budget by nearly 1 billion dollars, reducing its staff by approximately 17,000, giving the IRS the additional obligations of the expanding tax aspects of Affordable Health Care and FATCA/F(u)BAR - yes, I am solely responsible for that (u) because the entire program truly is FUBAR!

There are supporters of the IRS and as surprising as it might seem, to a very large degree, I am one of them because the I.R.S. must function properly and frankly, it is not functioning at all, right now. House Speaker Paul Ryan summed it up best, stating that 'Right now, we have a tax code that no one can understand being enforced by an agency that on one trusts'.

Hey, I really like the fact that there are fewer tax audits and lower compliance as a result of Republican Party policy but when the 'system' known as the IRS sends out multiple letters for the same year to the same person, having absolutely nothing to do with the tax return that person filed……and one cannot reach the IRS because their record of both unanswered correspondence or unanswered telephone calls (and believe me, at 3am when you are on hold for ¾ hour, only to be cut off, you are not going to be favorably impressed about the IRS!), this proves that it is broke. Of course it can be fixed. But knowing the current political climate, exacerbated, first and foremost by the cost of truly revamping the system - which no one wishes to discuss when further budget cuts likely lie ahead and secondarily, of course, by all the lobbyists who will show up in abundance within the halls of Congress, to lobby for maintaining their piece of the pie is there likely to be 'real' change?

And the credibility of the I.R.S. is definitely not helped by the growing identity theft crisis that the IRS faces: between 2010 and 2014, fraudulent identity thefts quadrupled to 730,000 cases in 2014 and the IRS has estimated that there are approximately 1 million 'malicious' attempts to access IRS data bases every day.

Sadly, I see this situation getting a whole lot worse before it gets better. Bi-partisan support for realistic change is what is needed. Alas, bi-partisan support for realistic change is nowhere in sight - it is as likely as the passage of a true and meaningful GST in India.