Thailand Unveils Bold Tax Reform as VAT Proposal Faces Backlash

[snoop1130]

Photo: The Thaiger

 

In an ambitious move to bolster Thailand's economy, Finance Minister Pichai Chunhavajira has presented a sweeping tax reform plan designed to increase state revenue and foster development. Unveiled at the Sustainability Forum 2025, the plan's core involves slashing the corporate income tax from 20% to 15%, in line with OECD benchmarks, and possibly reducing the personal income tax cap from 35% to attract global talent.

 

However, a proposed VAT increase from 7% to as high as 15% has sparked significant public concern. Critics, including economist Athiphat Muthitacharoen, argue this would disproportionately affect low-income families by elevating living costs. Recognising the backlash, Prime Minister Paetongtarn Shinawatra has distanced the government from the controversial VAT hike, signalling it may not proceed.

 

With fiscal pressures mounting—interest on government debt could exceed 14% of revenue due to borrowing—Athiphat calls for a fair, holistic tax reform. He points out that salaried workers bear most of the tax burden, despite a small portion of the population contributing.

 

 

Support for the corporate tax cut is strong among business leaders like Sanan Angubolkul, who see it as a way to revive employment and reduce costs. Nonetheless, doubts remain about its necessity given existing BoI incentives, with industry voices cautioning against rising production costs sparked by VAT changes.

 

As debate ensues, there's a clear emphasis on tailoring the tax system to ensure fairness and sustainability, reflecting the diverse economic landscape while remaining competitive globally.

 

-- 2024-12-16

 

 

[mfd101]

Part of the growing process, transitioning from 3rd World agriculture & 2nd World vehicle assembly to more sophisticated economic models.

 

Every country goes through it but it's not obvious that either the Thai ruling class or The People as a whole are prepared - or educated - for radical change.

[ukrules]

The OECD calls for minimum 15% tax rates to encourage countries NOT to offer tax breaks to companies whereby they pay little to nothing.

Here it's being twisted into an excuse to lower corporate taxes and screw the people over using VAT at the same time.

To simplify things - they're talking about giving corporations a massive tax discount at the expense of private citizens.

[Yumthai]

51 minutes ago, ukrules said:

To simplify things - they're talking about giving corporations a massive tax discount at the expense of private citizens.

Ideally, they should condition the 5% corporate tax cut to a minimum 2.5% increase on all staff (earning below a certain amount) wages.

[Tropicalevo]

1 hour ago, ukrules said:

The OECD calls for minimum 15% tax rates to encourage countries NOT to offer tax breaks to companies whereby they pay little to nothing.

Here it's being twisted into an excuse to lower corporate taxes and screw the people over using VAT at the same time.

To simplify things - they're talking about giving corporations a massive tax discount at the expense of private citizens.

 

at the expense of low paid, poorer and unemployed private citizens. ie the majority.

 

They also plan to reduce the % age of personal income tax.

Low paid workers do not pay any.

 

2 hours ago, snoop1130 said:

possibly reducing the personal income tax cap from 35% to attract global talent.

 

 

[ikke1959]

As many Thais don't even fill in a tax form it will only benefit again the rich, while the VAT affects everybody...

[hotchilli]

11 hours ago, ukrules said:

The OECD calls for minimum 15% tax rates to encourage countries NOT to offer tax breaks to companies whereby they pay little to nothing.

Here it's being twisted into an excuse to lower corporate taxes and screw the people over using VAT at the same time.

To simplify things - they're talking about giving corporations a massive tax discount at the expense of private citizens.

I got that impression too... cut corporate taxes and increase VAT... hit the poor and working classes who watch every baht

[black tabby12345]

Proposed VAT hike from 7 to 15%?

Without proper welfare to the general public will certainly cause backlash.

Whatever revenue increases, it is highly unlikely to be used to better the public social safety net(other than occasional money handout for vote buying) here.

 

Higher tax simply means more easy billions into the pocket of the 0.1% of the kingdom.

[lordgrinz]

16 hours ago, snoop1130 said:

Support for the corporate tax cut is strong among business leaders

 

No kidding, so is free money lavished on voters, who'd have thought.

[Guderian]

16 hours ago, snoop1130 said:

With fiscal pressures mounting—interest on government debt could exceed 14% of revenue due to borrowing

 

Really? That's the first time I've seen that scary number, no wonder they're desperate for yet more tax. The UK is in a pretty poor position fiscally, yet its interest payments "only" account for some 8% of expenditure, the Thai figure is almost double that. To make it worse, the return on gilts is presumably higher than the coupon paid on Thai government debt since the central bank base rate here is much lower than it is in the  UK, so the Thai government debt stock must be seriously large. Still, when you borrow 400 billion Baht to bribe voters, that's what ends up happening. They need to get their spending under control, not try to tax the life out of the economy.

[sungod]

17 hours ago, snoop1130 said:

Recognising the backlash, Prime Minister Paetongtarn Shinawatra has distanced the government from the controversial VAT hike, signalling it may not proceed.

 

Dont the ministers talk to each other before announcing reforms/policy?

[Spamhead]

18 minutes ago, sungod said:

Dont the ministers talk to each other before announcing reforms/policy?

 

Of course not. They introduce policies for the benefit of their own bank balances, not the benefit of the electorate.

[watchcat]

16 hours ago, ukrules said:

The OECD calls for minimum 15% tax rates to encourage countries NOT to offer tax breaks to companies whereby they pay little to nothing.

Here it's being twisted into an excuse to lower corporate taxes and screw the people over using VAT at the same time.

To simplify things - they're talking about giving corporations a massive tax discount at the expense of private citizens.

 

They want  to keep the filthy rich happy.

[Sydebolle]

Yaaaawwwwnnn .........

a) ensure tax collection across the board, which includes all those cheeky oligarch eliterians
b) 35% income tax gives real motivation for "tax planning", hence bring that down to 20% or less
c) excise tax is so out of this world which again allows for serious "tax planning" and "dishonest operations"
d) the VAT increase from 7% to 15% was and is a joke. Scared off the population for the acceptance without complaining of 10%; this you call psychological warfare
e) the Ministry of Finance might also spare a moment in not only tax collection but also tax spending. Any clues on how to recover, i.e.  the 300+ billion Baht losses carried forward by Thai Airways International? 
f) as long as the police and army are running around with converted flame throwers (now being used as money throwers), there is little hope for improvement. In all fairness, look at the jokes of Chinese submarines without engines, the aircraft carrier parked indefinitely for decades in Sattahip with one-day-a-year-duty for the kiddies on the "children's day" as a fun visit. In a recent visit to Nong Khai I saw not only one but two by-passes which had one thing in common - they were both completely empty. In short, you make money not only in optimizing fair collection but also in careful and common-sense orientated spending. This sacred Ministry proved over decades, that both the collection and spending are absolutely not under control. 
g) in order to fight the inferiority complex against the West, the government floated the idea of arrival taxing of each and every traveller landing in la la la land. At the same time, the very same gifted brainless goons floated the idea of taxing retirees on their entire assets they accrued over 45 years of working - resulting in tens of thousands of the better-off to move on. The semi-divine simply forgot, that all those aliens, dirty farangs and whatever they call them have moved at least once in their lifetime and, wonder over wonder, are able to do that anytime again. 

To wrap it up, yet another useless Ministry run by absolute morons and not having achieved anything to the betterment of Thailand or the up keeping of reputation and economic position the country once had - how sad 😞 

 

[PETERTHEEATER]

22 hours ago, snoop1130 said:

Prime Minister Paetongtarn Shinawatra has distanced the government from the controversial VAT hike, signalling it may not proceed.

Ah! I see. The Finance Minister is independent of the Government. I thought he was a member of the Cabinet. Silly me......😋

[Robin]

here is a very radical suggestion:-

How about Thais paying some form of ta on their income?  How about every Thai with an income above the minimum wage paying an income tax of 20% on any income above this?
At the moment, I believe that less than 25% of working Thais pay any form of income tax.

Without any revenue, how can any government function?

Has there ever been , or will there ever bee a government with the courage o introduce such a  from of universal income tax?

Without a tax base, Thailand will never become a 'developed country'

[MartinBangkok]

50 minutes ago, Robin said:

here is a very radical suggestion:-

How about Thais paying some form of ta on their income?  How about every Thai with an income above the minimum wage paying an income tax of 20% on any income above this?
At the moment, I believe that less than 25% of working Thais pay any form of income tax.

Without any revenue, how can any government function?

Has there ever been , or will there ever bee a government with the courage o introduce such a  from of universal income tax?

Without a tax base, Thailand will never become a 'developed country'

4 million Thais pay income tax (almost all employed by the state). Less than 10% of the registered work force.

[Karma80]

We want to give tax cuts to corporations, and can you pay for it. Welcome to Thaksin-onomics.

 

 

[rickudon]

52% of Thais are self employed, mainly in majority cash flow businesses. Most are not registered for income tax, and Thailand would have to employ another million on the public sector payroll to be able to assess their incomes!

[realfunster]

On 12/17/2024 at 8:44 AM, Robin said:

here is a very radical suggestion:-

How about Thais paying some form of ta on their income?  How about every Thai with an income above the minimum wage paying an income tax of 20% on any income above this?
At the moment, I believe that less than 25% of working Thais pay any form of income tax.

Without any revenue, how can any government function?

Has there ever been , or will there ever bee a government with the courage o introduce such a  from of universal income tax?

Without a tax base, Thailand will never become a 'developed country'

I am guessing that’s why they are looking at the VAT rate increase - an easily implemented scheme with broad capture.
 

In the thread, 4 million Thai income tax payers is mentioned, even allowing for the economic status of Thailand, that is ridiculously low. 

[lordgrinz]

6 hours ago, rickudon said:

52% of Thais are self employed, mainly in majority cash flow businesses. Most are not registered for income tax, and Thailand would have to employ another million on the public sector payroll to be able to assess their incomes!

 

Thai's refuse to follow any laws or rules, so I see no reason why they would pay taxes either, which is why the government is trying to push for a full digital economy. No more "cash", means no more hiding from taxes.

[chiang mai]

5 hours ago, realfunster said:

I am guessing that’s why they are looking at the VAT rate increase - an easily implemented scheme with broad capture.
 

In the thread, 4 million Thai income tax payers is mentioned, even allowing for the economic status of Thailand, that is ridiculously low. 

 

The devil is in the detail.

 

The average wage in Thailand is 15k Baht per month, that's 190k per year. The personal deduction for tax is 60k plus the first 150k of income is zero rated, that totals 210k. All of that means that on average, half the population doesn't make enough money to qualify to pay tax.

 

The 4 million that do pay tax are part of the 11 million who file tax returns, 4 million seeking refunds, 2 to 3 million filing null returns. All of a sudden that 4 million who pay tax makes more sense, The workforce is 38 million, 50% don't make enough money to file a return, leaves 9.5 million, 4 million paying tax, 4 million seeking refunds and 2 to 3 filing null returns.

[john donson]

step 1, spend less than your (tax) income

 

how many useless jobs pushing pencils with bad service