Thailand's finance Minister announced wide ranging tax breaks and incentives for the purpose of attracting foreign companies to set up regional headquarters in Thailand. According to Mr. Jatusripitak the package offers sweeping incentives in the region to companies setting up regional operating headquarters in Thailand, surpassing benefits offered by Singapore and Malaysia.

Under the new measure, regional headquarters operating in Thailand will qualify for a 10% corporate tax rate, just one-third of the standard rate currently charged.

A waiver will be offered regarding taxes on dividends paid to the headquarters by domestic and foreign subsidiaries.

Also waived would be taxes on dividends paid by the headquarters to its overseas parent firm.

25% of the investment cost can also be charged immediately by regional operating headquarters for depreciation on fixed assets.

Under new draft rules pursuant to the Money Laundering Act, Travelers in and out of Thailand will soon have to report amounts of money exceeding US$10,000 cash in foreign currency to customs officials or risk having those funds seized. According to a representative of the Money Laundering Commission, a declaration was compulsory under a new rule of the commission and the Finance Ministry. Currently, the draft is awaiting endorsement by the Finance Minister.

Presently, no restrictions exist concerning the amounts of foreign currency cash a foreigner may take in and out of Thailand. Conversely, 50,000 baht remains the maximum amount of Thailand currency that persons may take out of the country (except for travel to Burma, Laos, Cambodia and Malaysia which have a higher maximum).

Parliamentary approval has been given to the Electronic Transaction Law and is expected to be enforced in February next year. There are concerns being voiced regarding the power to be vested in an Electronic Transaction Committee.

According to the National Electronics and Computer Technology Center (Nectec) the bill is now awaiting the signature of His Majesty the King and that it would become law 120 days after being announced in the Royal Gazette.

The Juridicial Council has drafted a decree establishing which transactions would not be covered by the law. The new law will apply to all civil and commercial transactions using electronic data unless otherwise stated in the Royal Decree.

The bill would also apply to transactions with government agencies and consequently Nectec would work with government agencies to update regulations to conform to the new law. A 12 member Electronic Transaction Committee will be established to oversee the governmental policy and regulation of electronic transactions. Critics of the government have suggested that the Committee's mandate is too broad and jeopardized principles of free trade and an open market.

Wednesday night the House of Representatives passed the heavily criticized telecommunications service bill. The bill passed in a 276-76 vote despite concerns of private telecom operators who fear small operators will vanish from the industry.

The outcome of the vote allows for the bill to be submitted by Prime Minister Thaksin Shinawatra to His Majesty the King for his signature within 20 days. Once the bill has been signed it will then be announced in the Royal Gazette and will then become effective in 90 days.

The new law will limit foreign shareholdings in telecommunications companies to 25%. One aspect of the new law that remains unclear is wither the 25% restriction applies to operators already in existence. Under the new law , telecom operators must change their concession contracts and then reapply to the National Telecommunications Commission.

It is widely accepted that foreign shareholders hold more than 25% in most Thailand based telecommunications enterprises. Concerns were also raised that the passage of the bill would conflict with Thailand obligations for trade liberalization under the World Trade Organization.

The first lot of a total of 900 billion baht worth of bad loans is expected to be transferred to the Thai Asset Management Corp on Monday with the remainder to be transferred by year-end.

Although eligible to participate, twelve financial institutions including, UOB Radanasin, Standard Chartered Nakornthon, Kiatnakin Finance have declined to participate in the TAMC program. These twelve institutions had a total of 38.8 billion baht in bad loans eligible for transfer.

The TAMC is also considering establishing a separate property fund for TAMC assets according to Finance Minister Somkid Jatusripitak.

In related news, a two-year extension has been given for tax exemptions for asset transfers relating to debt restructuring up to the end of 2003.

The central bank's Corporate Debt Restructuring Advisory Committee (CDRAC) estimates that it has assisted in restructuring1,013 large cases with debts totaling 128.7 billion baht.

Amid criticism of the lack of transparency in the government run Thai Asset Management Corporation (TAMC) a spokesperson of the TAMC asserted that the names of debtors whose loans are transferred to the Thai Asset Management Corporation (TAMC) would not be made public because it would violate their rights.

Economists had earlier expressed concerns that the state-owned TAMC might experience meddling and political pressure from those with vested interests. However TAMC's spokesperson stated that the TAMC organization was in good order and was subject to rigorous examination by an auditor committee appointed by the TAMC board.

The first tranche of non-performing loans, estimated to be 300 billion baht will be transferred to the AMC on 15 October 2001. TAMC spokesperson stated that it would take about two years to know which business will be liquidated and which may survive.

The senate passed a bill yesterday making electronic data acceptable in court as evidence and making e-signatures as good as handwritten ones. The bill passed with an overwhelming majority with only three points requiring minor changes. Once the changes are made the bill will go back to the House for a final review. The bill which was originally initiated in 1998 to promote e-commerce is reported to comply with international rules set by the United Nations Commission on International Trade Law.

The Revenue Department will propose tax incentives to foreign filmmakers to promote tourism and attract more foreign film production in Thailand. Pursuant to the new proposals, the tax earnings of foreign actors will be given a ceiling. The department collects taxes at rates between 5% and 37% currently, which is the same rate applied to all personal incomes.

The Revenue Department is also considering a new scheme of tax rebates for tourists intended to boost tourism.

Tax cuts will also be given to local companies who incur expenses in organizing seminars for their employees according to the Revenue Department.

Pursuant to changes to be presented in Thailand's competition law, businesses who control a 50% or greater share in their respective markets will be considered a monopoly if their annual sales generate more than one billion baht. Under the earlier version of the Act, the definition of a dominant business was one with a 33.33% share in its market and one billion baht in sales, but such definition was never formally approved by the previous government. With the implementation of the 50% market share requirement significantly less businesses would be subject to the effect of the Act. The new law still requires ministry and cabinet approval.

Only operators in the industrial, commercial and agricultural sectors will be affected and not the service sector. Companies meeting the new criteria would be subject to regular scrutiny by the Trade Competition Penalties under the Act include a penalty of up to three years in jail and/or a six-million-baht fine.