Thai Tax Strategy Revamp: VAT Hike, Income Tax Cuts Proposed

[snoop1130]

File photo for reference only

 

Thailand's Finance Minister, Pichai Chunhavajira, has unveiled a bold shift in the nation's tax strategy to strengthen state revenue and boost its economic position. At the heart of this plan is an increase in the value-added tax (VAT), from the current 7% to potentially 10%. This move aims to balance a reduction in corporate and personal income tax rates, thereby driving national development and realigning economic competitiveness.

 

The backdrop to this strategy includes the Organisation for Economic Co-operation and Development's new guidelines urging a 15% minimum corporate tax. Thailand's existing corporate rate stands at 20%, but a proposed cut to 15% is on the table to remain globally competitive. Speaking at the Sustainability Forum 2025, Pichai highlighted the necessity for these adjustments in light of international tax trends and workforce mobility challenges.

 

Reducing the current top personal income tax rate of 35% to a flat 15% is under discussion, aimed at attracting foreign talent and addressing the low tax base. Meanwhile, the VAT increase is positioned as a means to even out consumption tax disparities while broadening the revenue base, a move potentially beneficial to low-income groups if implemented judiciously. In many countries, the VAT ranges between 15% and 25%, suggesting Thailand could leverage this as a financial advantage.

 

Pichai also pointed out the potential for invigorating Thailand’s investment climate, particularly in green energy sectors, by aligning fiscal policies with social equality goals. With domestic and international interest on the rise, evidenced by investment projects totalling over 700 billion baht in the past nine months, the government anticipates reaching an investment value of 1 trillion baht by year’s end.

 

 

The Minister detailed the importance of synchronising monetary policy to maintain low interest rates while tackling inflation concerns—they forecast inflation to stay below 1% this year, providing scope for the central bank to potentially reduce interest rates.

 

Additionally, Pichai addressed the complexities of weakening the Thai baht, acknowledging the balancing act of retaining foreign investor confidence while managing currency value strategically.

 

He concluded by advocating for an increase in national savings to address challenges posed by Thailand’s ageing population, warning of potential risks if social security and provident fund savings dwindle quickly post-retirement. This comprehensive fiscal policy realignment aims not only to enhance economic growth but also to sustain it in the long term.

 

-- 2024-12-04

 

 

[ukrules]

I was wondering when they got around to the elephant in the room : VAT

 

[Dmaxdan]

1 hour ago, snoop1130 said:

Reducing the current top personal income tax rate of 35% to a flat 15% is under discussion, aimed at attracting foreign talent and addressing the low tax base.

Interesting. Perhaps they have finally realized that the new tax laws are potentially going to scare away wealthy foreigners. 

[NoDisplayName]

Yes, interesting.

 

The folks earning higher incomes, who actually hold the power to write the regulations, are going to lower the top income tax bracket.

 

They've already made capital gains on stock sales tax free.

 

The majority of the population, who don't make enough to pay income tax, will see VAT increased on all the noodles and inner tubes and plastic buckets they can currently afford.

[jaywalker2]

VAT is a regressive tax -- it favors the wealthy. So you lower the tax on the rich to 15 percent and to pay for it you raise the VAT, which hurts the poor and middle class the most since they have to spend most of their income to live. This is a blatant play by the rich and corporations to steal even more of the economic wealth of the country. And don't bother trying to say it will stimulate economic growth. This has already been tried in other countries (like the US) and they're all drowning in debt.

[lordgrinz]

So, tax the poor and middle-class more, and tax the Elite less.....I wonder who thought this up.

[KimchiCurry]

15%  flat tax is pretty good for personal income. Increasing VAT will damage the low class though. Why not increase VAT depending on the products (electronics, foods, etc...).

The increase of VAT from 7% to 10% must bring a <deleted> ton of money to be able to balance the decrease of corporate and personal income tax.

[Rolo89]

Should be a flat 10% tax like Bulgaria. 

 

The LTV working visa with it's flat tax of 17% is too high for what you get back in return.

[watchcat]

6 hours ago, lordgrinz said:

So, tax the poor and middle-class more, and tax the Elite less.....I wonder who thought this up.

 

Someone belonging to the elite class?

[KimchiCurry]

46 minutes ago, Rolo89 said:

Should be a flat 10% tax like Bulgaria. 

 

The LTV working visa with it's flat tax of 17% is too high for what you get back in return.

 

10-12% would be ideal but having 15% is fair. I can consider paying that instead of 25-30%. I can see myself living long term there with that taxation.