Thai PM Paetongtarn Raises Concerns Over 15% VAT Proposal

[webfact]

Picture courtesy: Money and Banking

 

Thailand's Finance Ministry is contemplating a significant hike in value-added tax (VAT), stirring considerable debate among government officials and the public alike. Prime Minister Paetongtarn Shinawatra recently voiced her apprehensions regarding a potential increase from the current 7% to a hefty 15%. She acknowledged the stress such a change could impose on citizens, urging careful consideration.

 

Finance Minister Pichai Chunhavajira clarified on Wednesday that deliberations are in the early stages with the Finance Ministry "studying" the global tax landscape. "We are analysing both the advantages and disadvantages to secure maximum public benefit," he remarked, promising that public consultations will precede any official decision.

 

Introduced in 1992, Thailand's VAT rate has been a stable fixture at 7%, despite occasional discussions about raising it to 10%. Currently, countries around the world impose VAT rates between 15% and 25%.

 

Mr Pichai's comments were expanded at the recent Sustainability Forum 2025 in Bangkok, where he highlighted an OECD (Organisation for Economic Co-operation and Development) directive recommending a global corporate tax rate of 15%. He mentioned a possible reduction from Thailand's current 20% corporate tax, in line with international trends.

 

The personal income tax was another focal point. Thailand currently imposes a 35% tax on earnings, which Mr Pichai identified as high relative to global competitors who are slashing personal tax rates to attract talent. However, the base for personal income tax remains limited compared to a substantial base for consumption tax, signalling a need for restructuring.

Mr Pichai argued that adjusting consumption taxes sensibly could bridge socioeconomic gaps. "An increased VAT rate could ensure wealthier individuals contribute more, with the generated revenue allocated to assist low-income citizens and bolster infrastructure," he suggested, adding that the adjustment must be timely, considering Thailand's ageing population.

 

Lavaron Sangsnit, the finance ministry's permanent secretary, acknowledged these changes necessitate robust political resolve and should align with the nation's economic recovery trajectory.

 

Critics, including opposition voices, are concerned about the repercussions on the public. People's Party deputy leader Sirikanya Tansakun took to social media platform X to oppose the proposed VAT hike, fearing impacts on salaried workers and the middle class. Similarly, Thanakorn Wangboonkongchana from the United Thai Nation Party warned of potential price surges in goods and services.

 

In an attempt to manage the cost of living, the Thai cabinet recently decided to maintain the 7% VAT rate until September 30, 2025. Government spokesman Jirayu Houngsub confirmed the extension aims to temper inflationary pressures and promote spending, all while nurturing confidence in the nation's economic resilience.

 

Converted to local currency, this analysis invites further public scrutiny and discussions around the proposed tax adjustments. The coming weeks will likely see more debate as stakeholders mull over the broader implications of such fiscal policy changes, reported Bangkok Post.

 

-- 2024-12-06

 

 

[edwinchester]

A vat hike to 15% would be a massive burden on Thailand's poorest. Those on a low income spend a higher proportion of their income on consumables so to have a sudden 8% hike would be savage.

[Tropicalevo]

15% VAT is more than a 100% increase.

That will kill my business.

Customers are still struggling post Covid and most are not large enough to be VAT registered.

[KireB]

1 hour ago, edwinchester said:

A vat hike to 15% would be a massive burden on Thailand's poorest. Those on a low income spend a higher proportion of their income on consumables so to have a sudden 8% hike would be savage.

The poorest dont pay much VAT. Market vendors dont charge this tax

[ikke1959]

The Industry and business don't want to raise the daily wages to 400 THB while products for the people are being raised by 8%.... And than complaining that the Thai economy is not doing well..How can people buy things with no money?? My proposal still stands.. a minimum monthly wage of 13k for a 6 day work week for max 9 hour a day.. even if there are 6 holidays in a month... These holidays are being paid as well..that will be an average of 13k:24 days work= 541THB a day.. See how soon all the waste of extra holidays are gone, and see that people are able to spend more, which will increase the profits of the business and industry... But the industry and businesses are so greedy that they rather going bankrupt than invest

[Albo]

I found this article in the Post. I'm confused. Nothing I've read prior discusses 15% vat. It's 15% income tax .. the article even mentions this but does not clarify

 

This is huge and raises cost of living for foreigners by 8% PLUS (worldwide income tax) new income tax - which I doubt Thailand will be happy when many claim tax treaties, etc ... So, plan on paying something there imo.

 

Finally, what are we getting from all this taxation? Not even a multi year visa for families.

 

I'm not leaving tomorrow, but I will definitely be looking at third country options and even returning to US.

 

Thailand will always be less expensive (cheaper) overall, but the lack of insurance, medical double pricing, skint one year visas, bureaucracy, inability to purchase land (home).

 

Medical costs here are very much headed upward. No malpractice insurance or ethics to rectify medical issues.

 

I think we have crossed the Rubicon insofar as cost vs value in Thailand with these horrendous tax increases.

 

It seems the current government is completely on board with tax in the hell out of everyone so they can turn around and give the money away to the poor in exchange for votes.

[redwood1]

41 minutes ago, KireB said:

The poorest dont pay much VAT. Market vendors dont charge this tax

 

Exactly......Especially if they exempted basic necessities like cooking oil, rice, milk etc for people.....Like many countries do.....

 

But the rich would be paying a good amount of VAT when they buy a new Mercedes....