Business Tax on Interest Removed

Today the Cabinet approved the reduction of the Business Tax on Gross Interest earned for financial institutions from 3% to 0.001%, which is a de facto way of removing the business tax without amending the Revenue Code.
This is a major victory for me because I have been lobbying for almost 20 years to have this tax removed from financial institutions. The 3% business tax plus and additional 10% of the business tax as municipality tax has been a heavy burden on the Thai financial industry. At 20% interest rate, the business and municipality taxes amounted to 66 basis points of interest. At todays interest rates it is about .25% which is still substantial.
No other country in the world imposes this kind of taxes on financial institutions the cost of which is passed on to the borrowers.
I had lobbied the repeal of this tax when Khun Tarrin Nimmanhaeminda was Minister of Finance, and later on with M.R. Chatumongkol Sonakul when he was Minister of Finance,but without success. Then when I was Advisor to the Bank of Thailand, I had a study team of the young stars at the Bank of Thailand make a presentation of "The Banking Model" which showed all the costs a bank has to take into consideration when acting as a financial intermediary between savers and borrowers. Perhaps that has helped the authorities understand the working of a bank better and to also understand the onus of the business tax. Or perhaps M.R. Pridiyathorn Devakul, the present Minister of Finance, remembered what I told him about the Business Tax from the days when he was a Director of TISCO.