Picture courtesy of @schantalao Freepik

 

Thailand is stepping up its financial strategies, with caretaker Finance Minister Pichai Chunhavajira announcing a need to boost tax revenues by 600 billion baht. Presently, state tax revenue accounts for just 15% of GDP, noticeably lower than similar economies.

 

At the Fiscal Policy Office’s annual seminar, Pichai addressed the potential increase in the value-added tax (VAT), currently at 7%, below the legally mandated 10%. With this rate due to expire in September, the government is exploring options to fortify its financial footing.

 

Pichai highlighted that while Thailand's VAT is lower compared to international standards, any adjustments must consider the country's economic conditions and the advantages it gains from US tariff measures, which currently grant Thailand a competitive edge with a 19% rate.

 

An increase in VAT could serve a dual purpose: reducing public debt and bolstering support for the private sector and small-scale employment. The government aims to shrink the budget deficit to under 3% of GDP within one to two years post-2026.

 

To achieve these financial targets, instead of cutting expenditure, the government is considering enhancing revenue through securitising state-owned assets such as expressways and power lines, valued at about 2 trillion baht. Economic expansion is another focus, with Thailand's GDP growth expected at 2.3% this year.

 

Investment is key to this strategy. Before the 1997 Asian Financial Crisis, investment was 51% of GDP, but has since dwindled. In 2024, the investment-to-GDP ratio was 24%, translating to 4 trillion baht. The minister proposes raising this ratio to 30%, drawing 1 trillion baht from foreign direct investment (FDI) with the rest from domestic sources.

 

Challenges in attracting FDI include global shifts in production and land ownership issues, which the government is mitigating by offering 99-year leases. Ensuring sufficient resources like electricity and water also remains critical, as a current surplus could deplete within three years if foreign investment rises. Plans to expand green energy production are in the works.

 

Pichai concluded that boosting the investment-to-GDP ratio to 30-35% could drive GDP growth to 4-5%, potentially transforming Thailand's economic landscape significantly.

 

  Adapted by ASEAN Now from The Thaiger 2025-09-02

 

Stop the sub - save money 😎

Selling off the electric grid?......Thats frightening....

What does any government, especially one with corrupt leaders, know about investment. They will go to the old format and increase taxes so they can spend more and call it investment.

... reduce corruption ...   (sorry, I was just dreaming ...)

Buy bigger troughs ?

Start with lower tax on imported wines.. expats will drink more as it will become cheaper. Many time less is more than a lot a few times

10 hours ago, snoop1130 said:

instead of cutting expenditure

 

Well, that figgers.

If they were serious, they would actually implement taxation of world wide income for individuals, rather than waffle about it without any implementation details.

 

If they were serious, they wouldn't be considering waiving tax on overseas income brought into the country for this and next tax year.

 

And if they were serious, they wouldn't be offsetting "Top-Up Tax" for massively wealthy international corporations.  (Reported in today's Bangkok Post https://www.bangkokpost.com/business/general/3097681/cabinet-approves-support-for-firms-hit-by-new-tax .)

They could probably make the same amount by allowing people to buy alcohol 24/7 at seven

How much tax do the wealthy Sino-Thai business families pay?

15 hours ago, redwood1 said:

Selling off the electric grid?......Thats frightening....

Time to buy shares in candles

6 hours ago, ikke1959 said:

Start with lower tax on imported wines.. expats will drink more as it will become cheaper. Many time less is more than a lot a few times

I bet they'll do the opposite. It's not only about alcohol tax revenue but also about the costs of carnage caused when under influence, the healthcare costs from it, etc. Drunks will keep on drinking, so if revenue is the main focus here, taxes should further increase significantly.

1 hour ago, Zaphod Priest said:

If they were serious, they would actually implement taxation of world wide income for individuals, rather than waffle about it without any implementation details.

 

If they were serious, they wouldn't be considering waiving tax on overseas income brought into the country for this and next tax year.

 

And if they were serious, they wouldn't be offsetting "Top-Up Tax" for massively wealthy international corporations.  (Reported in today's Bangkok Post https://www.bangkokpost.com/business/general/3097681/cabinet-approves-support-for-firms-hit-by-new-tax .)

They prefer to tax the poor

Sounds like the VAT increase is a done deal, although no doubt there will be a lot of posturing about it.

 

Securitising state assets is an interesting one. If done properly it could unlock value, “done properly” being the hard bit. Many big players will see it as an opportunity to line their own pockets at the expense of the state.

2 hours ago, Zaphod Priest said:

If they were serious, they wouldn't be considering waiving tax on overseas income brought into the country for this and next tax year.

why is this considered a good thing, limited to only 2 years ... can you please explain, thank you.

Every time they talk about raising VAT there are many objections. If this had been increased by .25% a year for 4 years it would be at 8% now with little pain realized.

While lifting the incoming ceiling there might be also an alternative to review the costs which are TREMENDOUS and in many cases a total waste of money ........... 

But the uneducated majority of the electorate will not understand this either 😞 

Ironically real inflation is rampant and goods and services prices have steadily risen over the past years, way more than this potential 3% VAT increase.

17 hours ago, snoop1130 said:

the government is exploring options to fortify its financial footing

Shouldn't that be : the government is exploring options to fortify its financial looting ?

 

17 hours ago, snoop1130 said:

caretaker Finance Minister Pichai Chunhavajira

So there is barely a government , but this guy is taking advantage

to push for increased revenue.

 

 

17 hours ago, snoop1130 said:

Challenges in attracting FDI include.......

..... rumors that all remitted monies will be considered assessable income, until proven otherwise. What foreign investor would wire a pile of investment money to Thailand, under these circumstances. 

3 hours ago, angryguy said:

They could probably make the same amount by allowing people to buy alcohol 24/7 at seven

They have enough accident casualties clogging up their emergency departments as it is.

1 hour ago, Sydebolle said:

While lifting the incoming ceiling there might be also an alternative to review the costs which are TREMENDOUS and in many cases a total waste of money ........... 

But the uneducated majority of the electorate will not understand this either 😞 

Indeed a lot of money is wasted.. too many generals for example.. every village get money that they have to use, and many unnecessary things are done as if they don't use that money they don' t get it next year. And the there are a lot of people hired to do work.Example a constructor, rents an underconstructor, who rents a company, that rents people to do the job..and everybody has to earn, so costs are skyrocketing

Don't refund VAT to tourists, retaining millions (hundreds?) of baht for government use.

instead of increasing taxes, just decrease government spending.

Raising VAT is the easy way out. What they should be doing is shaking up the Income Tax system to identify the thousands of people earning above the taxable threshold but not declaring and paying tax.

4 hours ago, Yumthai said:

Ironically real inflation is rampant and goods and services prices have steadily risen over the past years, way more than this potential 3% VAT increase.

Menus here in Chiang Mai have white tape with new higher prices on them all over the place.  I guess they will just keep adding new tape over until things stabilize and they can afford to buy new menus.

There are many superrich here who doubtlessly don't pay their fair share. However, taxing everyone more will drive some to live abroad. 

I suppose they could tax expats more (don't be surprised).

20 minutes ago, Purdey said:

There are many superrich here who doubtlessly don't pay their fair share.

Are there any countries where the rich effectively pay their fair share? Is top marginal income tax of 35% a fair rate?

Tax the poor.