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

[still kicking]

15 hours ago, lordgrinz said:

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

Perhaps Tony?

[chiang mai]

2 minutes ago, Phillip9 said:

 

ONLY???  16% make the US by far the largest export market.  Second place is China at 12%.

True, but 75% of Thai exports are to regional and Asia/Pac countries with only 25% to Western countries. So a potential loss of a single large trading partner, whilst painful, is not catastrophic. And let us not forget, China is not fully back on line yet.

 

https://oec.world/en/profile/country/tha

[Presnock]

16 hours ago, Dmaxdan said:

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

This change in personal income tax is to attract WORKERS to earn a salary here.  Under the LTR wealthy workers already have that lower income tax (they get a work permit through the BOI too. AND, remember they have been talking about different tax scheme for many months now and this is just another one to throw into the mixture.  This didn't seem to say anything about remitted funds or worldwide income taxation.

[chiang mai]

6 minutes ago, Presnock said:

This change in personal income tax is to attract WORKERS to earn a salary here.  Under the LTR wealthy workers already have that lower income tax (they get a work permit through the BOI too. AND, remember they have been talking about different tax scheme for many months now and this is just another one to throw into the mixture.  This didn't seem to say anything about remitted funds or worldwide income taxation.

I expect the new remittance rule announced a year ago will be in addition to the suggested changes to VAT. There's a wide array of tax classes and types so potentially they can adjust many of them at the same time. I don't think anyone should get excited and think that changes to VAT might negate changes to foreign remittances, I don't believe it will.

[Phillip9]

2 hours ago, chiang mai said:

loss of a single large trading partner, whilst painful, is not catastrophic

A 16% decline in exports would certainly be a catastrophe.  That would be about a 10% decline in total GDP.  That would be  worse than if all tourism ended in Thailand.  So even worse than covid.

 

 

 

[chiang mai]

1 minute ago, Phillip9 said:

A 16% decline in exports would certainly be a catastrophe.  That would be about a 10% decline in total GDP.  That would be  worse than if all tourism ended in Thailand.  So even worse than covid.

 

 

 

Except loss of exports resulting from US tariffs wouldn't happen in one fell swoop overnight. They would more likely happen over time and would not extend to the entire export destination. During that time, new markets would be developed, perhaps not to the full extent of the loss but the point is, it's not an instantaneous drop or loss that is total.

[ronnie50]

17 hours ago, KimchiCurry said:

Why not increase VAT depending on the products (electronics, foods, etc...).

 

Yes, that makes more sense. Many countries have itemised what groups of items require VAT and what goods and services are exempt. Thailand already does this I think (no VAT/GST on food at supermarkets? Just other goods like cleaning liquids, etc.?)

[ukrules]

19 hours ago, KimchiCurry said:

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.

 

Lets not assume that the tax allowances remain the same or even continue to exist under this new system.

 

A true flat tax is across the board on all income.

Why have they been attempting to get all the street vendors into the tax system in Bangkok?

 

I think we now know why.

[redwood1]

If they raised the VAT to 10 or especially 15....They would have more money rolling in than they know what to do with....

 

I think they are wising up to the fact that every single farang in Thailand will be doing every possible thing in their power to make sure they dont pay a single baht in taxes....EVER....

 

The VAT is the great equalizer.....Everybody pays that every day.....No exceptions.....

[watchcat]

On 12/4/2024 at 2:58 PM, lordgrinz said:

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

 

A filthy rich person?

[chiang mai]

10 hours ago, redwood1 said:

The VAT is the great equalizer.....Everybody pays that every day.....No exceptions.....

 

Except increasing VAT increases the debt load on the poor and unfairly benefits the wealthy who can more easily afford it. And in case you missed it, Thailand's population comprises mostly poor people who don't earn enough money to even file a  tax return. So no, it is not a great equalizer, it is very one sided, 

[hotchilli]

On 12/4/2024 at 7:19 PM, snoop1130 said:

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.

So drop the income tax for the rich and increase VAT which hits the poor.

[Muhendis]

18 hours ago, chiang mai said:

I doubt seriously that Thailand is concerned about US import tariffs, the US is only around 16% of Thai exports.

It might be only 16% but in money it is over 49 billion US$ (2022).

[Ben Zioner]

On 12/4/2024 at 9:58 PM, lordgrinz said:

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

Nonsense, right now the Elite doesn't pay anything,  the poor pay only the 7% VAT while the middled income earners are squeezed by a ridiculously steep tax scale. 

 

I see this as faiir and effective. Fair in that everyone must contribute and effective by widening the tax base to those who remain under the RD's radar.

[chiang mai]

10 minutes ago, Muhendis said:

It might be only 16% but in money it is over 49 billion US$ (2022).

Numerically that is correct, practically speaking it's not especially relevant.

 

Thailand is not reliant on the West and certainly not on the US for its export markets, 75% are in the Far East and Asia. Each of the individual markets increase and decrease their share in response to national or global economic events, the latter being far more dangerous because is causes losses on many markets simultaneously. Any losses in one market are more reductions rather than losses and take time to take effect, it is almost impossible to think those losses would affect all of Thailand's exports to that country since many such as foodstuffs are critical to individual nations, just as essential components are critical to the importing nations own economy.

[Rolo89]

The idea that Thailand isn't reliant on the West is crazy.

 

Direct export to the west is huge with the US being the biggest partner by far, indirect export stuff like circuits that are used by China, Japan etc to then export to the west is also huge.

 

https://oec.world/en/profile/country/tha

[chiang mai]

10 minutes ago, Rolo89 said:

The idea that Thailand isn't reliant on the West is crazy.

 

Direct export to the west is huge with the US being the biggest partner by far, indirect export stuff like circuits that are used by China, Japan etc to then export to the west is also huge.

 

https://oec.world/en/profile/country/tha

Exports to the US total USD 48.5 bill., total exports to the West circa USD 80 bill. Total exports to the rest of the world USD 312 -80 or 75%   Thailand Exports By Country	Value	Year
United States	$48.48B	2023
China	$34.17B	2023
Japan	$24.59B	2023
Australia	$12.21B	2023
Malaysia	$11.97B	2023
Vietnam	$11.22B	2023
Hong Kong	$11.10B	2023
Singapore	$10.24B	2023
India	$10.12B	2023
Indonesia	$10.09B	2023
Philippines	$7.98B	2023
Cambodia	$6.45B	2023
South Korea	$6.07B	2023
Netherlands	$5.84B	2023
Laos	$4.64B	2023
Germany	$4.56B	2023
Myanmar	$4.41B	2023
United Kingdom	$4.08B	2023
Switzerland	$4.04B	2023
Mexico	$3.70B	2023
South Africa	$3.53B	2023
United Arab Emirates	$3.31B	2023
Saudi Arabia	$2.73B	2023
Italy	$2.10B	2023
France	$1.98B	2023
Canada	$1.90B	2023
Brazil	$1.82B	2023
Belgium	$1.67B	2023
Turkey	$1.54B	2023
Argentina	$1.54B	2023
New Zealand	$1.41B	2023
Bangladesh	$1.14B	2023
Iraq	$901.35M	2023
Spain	$867.57M	2023
Pakistan	$854.41M	2023
Russia	$820.83M	2023
Czech Republic	$787.48M	2023
Israel	$784.06M	2023
Egypt	$667.91M	2023
Poland	$596.97M	2023
Sweden	$527.65M	2023
Hungary	$517.53M	2023
Ireland	$496.83M	2023
Chile	$477.18M	2023
Kuwait	$452.83M	2023
Oman	$443.55M	2023
Denmark	$361.20M	2023
Norway	$343.52M	2023
Qatar	$327.48M	2023
Peru	$296.84M	2023
Sri Lanka	$290.87M	2023
Romania	$276.49M	2023
Ecuador	$265.34M	2023
Libya	$260.64M	2023
Senegal	$238.03M	2023
Austria	$225.26M	2023
Yemen	$225.25M	2023
Portugal	$215.73M	2023
Slovakia	$212.76M	2023
Colombia	$204.56M	2023
Jordan	$204.30M	2023
Nigeria	$201.68M	2023
Guatemala	$196.92M	2023
Kenya	$194.05M	2023
Mozambique	$181.87M	2023
Papua New Guinea	$177.98M	2023
Panama	$175.11M	2023
Bahrain	$168.14M	2023
Ivory Coast	$161.53M	2023
Tanzania	$157.77M	2023
Lebanon	$150.81M	2023
Honduras	$149.12M	2023
Finland	$143.20M	2023
Greece	$138.31M	2023
Iran	$135.09M	2023
Costa Rica	$132.92M	2023
Cameroon	$130.66M	2023
Slovenia	$119.58M	2023
Dominican Republic	$113.18M	2023
Ghana	$112.74M	2023
Bulgaria	$111.33M	2023
Trinidad And Tobago	$111.05M	2023
Morocco	$107.09M	2023
Algeria	$104.01M	2023
Angola	$102.88M	2023
Lithuania	$98.26M	2023
Brunei	$97.68M	2023
Uzbekistan	$96.80M	2023
El Salvador	$92.56M	2023
Jamaica	$92.02M	2023
Maldives	$85.26M	2023
Tunisia	$84.86M	2023
Mauritius	$80.31M	2023
Kazakhstan	$76.14M	2023
Fiji	$75.61M	2023
Benin	$74.44M	2023
Georgia	$57.62M	2023
Togo	$54.86M	2023
Zimbabwe	$53.48M	2023
Nicaragua	$51.03M	2023
Macau	$49.50M	2023
New Caledonia	$47.93M	2023
Nepal	$45.89M	2023
Congo	$45.60M	2023
Ukraine	$41.71M	2023
Namibia	$40.60M	2023
East Timor	$39.68M	2023
Bolivia	$39.14M	2023
Ethiopia	$38.01M	2023
Serbia	$37.47M	2023
Suriname	$34.17M	2023
Paraguay	$34.13M	2023
Cyprus	$34.11M	2023
Estonia	$33.59M	2023
Uruguay	$33.54M	2023
French Polynesia	$29.70M	2023
Uganda	$29.35M	2023
Latvia	$27.82M	2023
Guyana	$26.61M	2023
Venezuela	$26.57M	2023
Syria	$26.43M	2023
Seychelles	$26.38M	2023
Republic of the Congo	$26.17M	2023
Malta	$25.18M	2023
Marshall Islands	$24.62M	2023
Madagascar	$24.02M	2023
Croatia	$24.01M	2023
Djibouti	$23.76M	2023
Armenia	$23.74M	2023
Sudan	$23.05M	2023
Barbados	$22.36M	2023
Gabon	$21.93M	2023
Somalia	$21.37M	2023
Mongolia	$21.14M	2023
Guinea	$20.46M	2023
Mali	$20.13M	2023
Bhutan	$18.71M	2023
Macedonia	$18.60M	2023
Vanuatu	$17.25M	2023
Solomon Islands	$15.12M	2023
Belarus	$14.10M	2023
Bosnia And Herzegovina	$13.18M	2023
Azerbaijan	$12.68M	2023
Mauritania	$11.72M	2023
Zambia	$11.10M	2023
Samoa	$11.01M	2023
Afghanistan	$10.54M	2023
Gambia	$10.53M	2023
Burkina Faso	$9.84M	2023
Sierra Leone	$9.21M	2023
Antigua and Barbuda	$9.05M	2023
Albania	$8.86M	2023
Aruba	$8.58M	2023
Bahamas	$8.37M	2023
Equatorial Guinea	$8.29M	2023
Luxembourg	$8.03M	2023
Cayman Islands	$7.73M	2023
Liberia	$7.32M	2023
South Sudan	$7.26M	2023
Iceland	$6.92M	2023
Cape Verde	$6.50M	2023
Chad	$6.07M	2023
Malawi	$5.84M	2023
Grenada	$5.84M	2023
Kiribati	$5.67M	2023
Niger	$5.15M	2023
Kyrgyzstan	$4.87M	2023
Cuba	$4.15M	2023
Haiti	$4.00M	2023
Dominica	$3.91M	2023
St Kitts and Nevis	$3.82M	2023
Turkmenistan	$3.24M	2023
Tajikistan	$3.12M	2023
Bermuda	$2.88M	2023
Palestine	$2.76M	2023
Tonga	$2.71M	2023
Rwanda	$2.42M	2023
Montenegro	$2.41M	2023
Botswana	$1.88M	2023
Palau	$1.84M	2023
Northern Mariana Islands	$1.80M	2023
Central African Republic	$1.79M	2023
Burundi	$1.69M	2023
Belize	$1.65M	2023
Lesotho	$1.55M	2023
Guinea Bissau	$1.18M	2023
Moldova	$1.07M	2023
St Vincent and the Grenadines	$1.04M	2023
Comoros	$738.49K	2023
Swaziland	$661.61K	2023
Greenland	$487.86K	2023
Sao Tome And Principe	$273.29K	2023
Andorra	$272.27K	2023
Eritrea	$221.12K	2023
San Marino	$66.52K	2023
Faroe Islands	$30.90K	2023
North Korea	$1.38K	2023
Guam	$7.95M	2021
American Samoa	$1.98M	2021
Mayotte	$14.65M	2013
Netherlands Antilles	$12.29M	2010

 

 

https://tradingeconomics.com/thailand/exports-by-country

[henryford1958]

22 hours ago, paddypower said:

Borrocks......I just went to Makro yesterday and discovered that the import duty on wine had been reduced, resulting in a approx. 10%  decrease the retail prices (of wine, anyway). 

 

Really, i have not noticed any deduction in wine prices. But it is difficult to know as every wine bottle has a different price.

[Yumthai]

35 minutes ago, Ben Zioner said:

Nonsense, right now the Elite doesn't pay anything,  the poor pay only the 7% VAT while the middled income earners are squeezed by a ridiculously steep tax scale. 

 

I see this as faiir and effective. Fair in that everyone must contribute and effective by widening the tax base to those who remain under the RD's radar.

Agreed. Increasing indirect taxes like VAT is an easy, cheap and quick way to fix the inefficient tax collection system forcing the wealthiest and other non-complying folks to contribute more in absolute.

 

People are used to deal with constant price increases in Thailand, be it due to high inflation or tax, result is the same for them.

[TigerandDog]

I can remember when it was first floated to have a GST (VAT) in Australia. The Howard Govt was suggesting, if I remember correctly, 10% on everything. This was changed to 10% only on certain types of items. However, before the GST came into effect, most of the govt's top economic advisors were suggesting a flat 20% GST on all products, even imported goods, and ZERO personal income tax, which meant that people had more of their wages to spend. Their argument was that the govt would raise more tax this way. They even used Kerry Packer as an example. Packer purchased his private jet/s overseas and flew them into Oz, no tax paid on the planes. The economists plan, if implemented, meant Packer would have to pay 20% GST on a plane worth millions of dollars. Howard liked the idea but the Treasurer Peter Costello somehow managed to convince parliament that this wouldn't work.  

The economists did get it right because their GST formula actually meant that the rich would end up paying their fair share of tax as they would be purchasing high value brand name items, thus more tax paid by them, and with this GST formula it guaranteed that they paid their fair share of tax.  Of course history shows that this didn't happen and the middle & low income earners still pay the most personal income tax as they don't have the loopholes & tax havens that the rich do.

Govt's, regardless of which country, will always structure their tax rules to favour the wealthy. 

[chiang mai]

I think the issue is affordability. The wealthy can afford any increase in VAT, the poor cannot. No Revenue department would knowingly increase income tax on the poorest in society  yet this is effectively what is being proposed. If anything, the move should be towards increasing taxes on the most wealthy, something that many countries are actively considering.

[newbee2022]

On 12/4/2024 at 7:19 PM, snoop1130 said:

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

 

 

To attract investors there might be an upcoming obstacle. In US the Fed probably will rise the interest rate up to 7% and more due to Trump's economy plans. 

This will suck money out of Thailand to be invested in US.

[jippytum]

Like most goverments they give with one hand and rob you with the other one. 

Thaksin's populist vote grabbing schemes are a disaster for the economy. 

Raising vat to 10% would hurt the poorest in society but would keep the money trough topped up for greedy politicians. 

 

[Sydebolle]

Now that makes sense. Bring taxation down to normal levels and you will have much less "tax planning" and outright cheaters to hunt after. 35% income tax is ridiculous compared to what the state offers those pristine tax payers in return; 20% corporate taxation is also more than border line. 

This will also do away with the planned (over-)taxation of non-Thais. There the mathematics are even simpler. A non-Thai has a pension of, say, THB 40'000/month. If the state takes away 15% (THB 6,000) it means, that this person spends only THB 34,000 and not THB 40,000 into the SME industry of Thailand (food, drinks, rent, entertainment, transport etc.) - in essence the state cuts into the earnings and profitability of the Thai SME. 

VAT depends on consumption; those consuming more = pay more money whereas the percentage is linear and not progressive. In addition, the VAT system is in place and works (mostly; the convenience stores of Somchai and Yodsak remain excluded but pay at least in-put VAT). 

If this goes through, then Thailand inched itself closer to the 21st century indeed! Carpe diem! 

[NoDisplayName]

3 hours ago, chiang mai said:

I think the issue is affordability. The wealthy can afford any increase in VAT, the poor cannot. No Revenue department would knowingly increase income tax on the poorest in society  yet this is effectively what is being proposed. If anything, the move should be towards increasing taxes on the most wealthy, something that many countries are actively considering.

 

The most wealthy don't pay income tax.

 

They keep their ill-gotten booty offshore, in coded accounts, under family trusts, with multiple ways of remitting funds as needed with minimal taxes.

 

It's the mildly wealthy supporters of the most wealthy that will benefit from lower income tax rates.

[StraightTalk]

15% VAT plan has PM vexed
https://www.bangkokpost.com/business/general/2914767/15-vat-plan-has-pm-vexed

[chiang mai]

1 hour ago, NoDisplayName said:

 

The most wealthy don't pay income tax.

 

They keep their ill-gotten booty offshore, in coded accounts, under family trusts, with multiple ways of remitting funds as needed with minimal taxes.

 

It's the mildly wealthy supporters of the most wealthy that will benefit from lower income tax rates.

Conjecture, supposition, guesswork and popular myth, nothing more. I suggest that the truly wealthy pay tax because they can afford to. There is ample evidence that wealthy people and very wealthy people pay their share of tax or at least pay large amounts.

[Mr Meeseeks]

Being in the current 35% tax bracket, I would welcome a reduction to 15% 😃

[chiang mai]

OECD tax trivia for the region and globally, some interesting stats.

 

https://www.oecd.org/content/dam/oecd/en/topics/policy-sub-issues/global-tax-revenues/revenue-statistics-asia-and-pacific-thailand.pdf

[AhFarangJa]

On 12/5/2024 at 9:31 AM, chiang mai said:

Household or consumer debt is high but government or public debt is low, compared to many countries, less than 60% of GDP.

 

The idea behind closing tax loopholes is to make sure wealthy Thai's who evade tax offshore, pay their fair share, foreigners just got caught up in closing that loophole.

My take on it, maybe right, maybe wrong, is that they wanted to go after the Thais offshore but included Foreigners so they could not be accused of being racist to Thais. It would be easy to exempt foreigners.