Picture courtesy of Thairath

 

Thailand's government plans to increase VAT gradually to 10% by 2028 to address budget deficits. Finance Minister Ekniti Nitithanprapas announced the reform during the Money Expo 2025 in Bangkok, emphasizing the need for fiscal stability. The initial VAT hike will be a 1.5% rise to 8.5%.

 

The VAT increase is part of the Finance Ministry’s medium-term fiscal framework (MTFF), approved by the Cabinet on November 18. The MTFF aims to enhance investor confidence by demonstrating commitment to financial discipline. Thailand’s fiscal deficit last fiscal year was 4.4%, exceeding international norms and leading to downgrades by Moody’s and Fitch Ratings.

 

Ekniti assured that if VAT increases face challenges, other measures will be used to maintain fiscal health. The government aims to reduce the deficit to under 3% of GDP by 2029 through a series of tax reforms and expenditure cuts. Plans include leveraging the Thailand Infrastructure Fund and expanding public-private partnerships.

 

The government is targeting cost reductions by eliminating redundant spending and consolidating welfare schemes. Additionally, a stimulus package for SMEs is in preparation, offering loans, loan guarantees, and tax perks to encourage government contract bids. Large corporations may receive tax incentives for supporting smaller businesses under the "big brothers help little brothers" initiative.

 

Looking forward, the government will introduce the Thailand Individual Savings Account for more efficient long-term savings. This will replace various existing funds, streamlining the retirement savings framework, reported The Thaiger.

 

Key Takeaways

• Thailand will raise VAT gradually to 10% by 2028 to combat fiscal deficits.
• The government’s MTFF outlines plans to reduce the deficit and boost investor confidence.
• Additional reforms include SME support and revamped retirement savings schemes.

 

Related Stories

Caretaker Cabinet Extends 7% VAT Rate for Another Year

Major VAT Fraud Network Busted: Over 1 Billion Baht in Losses

 

  Adapted by ASEAN Now from The Thaiger 2025-11-21

 

 

 

Tax tax tax! I thought Taxin was in prison already. 

Does this mean more money to waste on useless military gear ?

They are clearly broke... but tax is a politically dangerous game here in Thailand, as most normal Thais just can't afford things as they are now, and few pay tax at all... I probably pay more tax than most normal Thais do.

What the government needs to do is tax the wealthy instead.... not normal Thais and SMEs as many large corporations and wealthy families dodge so much tax. it's crazy.

On top of that, then crack down in a meaningful way on the rampant corruption that is on show everywhere... Duh! Don't go for low hanging fruit like tourism and VAT, go for the real bad guys... or you will be forever bailing out the poor and it will just stoke up tension. I'm not saying go lefty about this, just be fair... which it isn't at the moment.

I am sure that those that live in the Western economies would applaud paying 7-10 % in total taxes as the majority in Thailand do by way of VAT.

 

30 minutes ago, Sir Dude said:

They are clearly broke... but tax is a politically dangerous game here in Thailand, as most normal Thais just can't afford things as they are now, and few pay tax at all... I probably pay more tax than most normal Thais do.

What the government needs to do is tax the wealthy instead.... not normal Thais and SMEs as many large corporations and wealthy families dodge so much tax. it's crazy.

On top of that, then crack down in a meaningful way on the rampant corruption that is on show everywhere... Duh! Don't go for low hanging fruit like tourism and VAT, go for the real bad guys... or you will be forever bailing out the poor and it will just stoke up tension. I'm not saying go lefty about this, just be fair... which it isn't at the moment.

How much of Thailand's economy is underground? 

3 minutes ago, Mike_Hunt said:

How much of Thailand's economy is underground? 

I think you and all know the answer to that.

Tax on imports from lazada and shopee , now VAT higher.

Taxes on foreign income.

Things were better under Prajut.

 

Yes underground economy like markets , but that is more for only food.

 

1 hour ago, Sir Dude said:

What the government needs to do is tax the wealthy instead

 

1 hour ago, Sir Dude said:

many large corporations and wealthy families dodge so much tax

 

1 hour ago, Sir Dude said:

go for the real bad guys

 

Who do you think run this country?

I believe that the increase in VAT was announced over 15 years ago but deferred by successive governments; it was always a time-bomb.

36 minutes ago, FlorC said:

Tax on imports from lazada and shopee , now VAT higher.

Taxes on foreign income.

Things were better under Prajut.

 

Yes underground economy like markets , but that is more for only food.

 

Farming is about Thailand's biggest industry ,how many farmers pay tax, the wife rears a few cattle has done for some yeras, yet to pay any tax ,we have some big sugar cane growers in the area income is a couple of million baht how much tax do they pay.

Not saying our Somchie with his 20 rie of rice should pay tax ,but a but a tax allowance system , pay tax after ay 60k income would work.

Dairy farmers pay tax after a 500k income most pay no more than 10 000 baht/year

4 hours ago, snoop1130 said:

Thailand's government plans to increase VAT gradually to 10% by 2028 to address budget deficits. Finance Minister Ekniti Nitithanprapas announced the reform during the Money Expo 2025 in Bangkok, emphasizing the need for fiscal stability. The initial VAT hike will be a 1.5% rise to 8.5%.

Regressive taxation screws the lowest on the income ladder.  3% is no small bump - it's significant and it's going to hurt consumers. Looks like they are going to take the "boiling a frog" approach, like people won't notice. What they will end up doing is chilling the economy which will in turn make their tax revenues even less.  Let's see how Somchai Average reacts.

10 minutes ago, Base32 said:

Regressive taxation screws the lowest on the income ladder.  3% is no small bump - it's significant and it's going to hurt consumers. Looks like they are going to take the "boiling a frog" approach, like people won't notice. What they will end up doing is chilling the economy which will in turn make their tax revenues even less.  Let's see how Somchai Average reacts.

 

I don't think people gonna worry much because a 100 baht item now cost 103 baht, but for the government it means a 45% increase in VAT income

3 hours ago, Sir Dude said:

They are clearly broke... but tax is a politically dangerous game here in Thailand, as most normal Thais just can't afford things as they are now, and few pay tax at all... I probably pay more tax than most normal Thais do.

What the government needs to do is tax the wealthy instead.... not normal Thais and SMEs as many large corporations and wealthy families dodge so much tax. it's crazy.

On top of that, then crack down in a meaningful way on the rampant corruption that is on show everywhere... Duh! Don't go for low hanging fruit like tourism and VAT, go for the real bad guys... or you will be forever bailing out the poor and it will just stoke up tension. I'm not saying go lefty about this, just be fair... which it isn't at the moment.

 

So Thailand needs to chase the super rich bludgers, political hangers-on and special interests groups filling their boots, same as western governments can't seem to nail. 

 

Good luck with that.

What a good idea to ruin the country further... Things will get more and more expensive, while the daily wages are not rising.. Everything will be more expensive, with the expensive THB it will chase more tourists away... and later complaining that the everything is going down.. Now with the shopping of overseas products are being taxed of Lazada and Shopee, things will get  down, even for the as they always call the local businesses... Very smart movement which shows the incompetence of the Government

Y'all are as ignorant about the Thai tax structure as you are about the USA's, and probably your home countries.

 

Thai VAT was discounted to 7% from the 10% initially instituted in 1992.  It's a very fair tax, unlike most other countries.   It has always been an extended temporary reduction, by Royal Decree.  The most recent extension keeps the 7% rate in effect until at least September 30, 2026. 

 

And the silly notion of taxing the wealthy, yes, more ignorance, as just like the USA, they pay the majority of the income tax already in TH also.  

 

About 4% of the population, or about 3M people actually pay income tax, guess who they are ???

 

Y'all might want to expand your news sources beyond the 'DailyMail' 

 

https://tradingeconomics.com/thailand/news/news/483850

 

Oh no my beer

1 hour ago, CallumWK said:

 

I don't think people gonna worry much because a 100 baht item now cost 103 baht, but for the government it means a 45% increase in VAT income

A ฿100 THB item will cost ฿110 THB with a 10% VAT.  I think we will find out whether or not the increase from 7% to 10% will be the "Third-Rail" of Thai politics or not.  

8 minutes ago, Base32 said:

A ฿100 THB item will cost ฿110 THB with a 10% VAT.  I think we will find out whether or not the increase from 7% to 10% will be the "Third-Rail" of Thai politics or not.  

 

An item which today cost 100 baht has already 7% VAT included, so it will cost 103 baht after the VAT increase

Thailand moving closer to the West' economic model: tax & squander.

4 minutes ago, Lee65 said:

Thailand moving closer to the West' economic model: tax & squander.

 

It may come as a surprise to you, but to develop a country you need money, and the only way for a government to fill the coffers is by levy taxes

6 minutes ago, CallumWK said:

... the only way for a government to fill the coffers is by levy taxes

 

Indeed.  And the way governments empty the coffers is by squandering

I am a supporter of VAT. It is a consumption tax,  a Value Added Tax.   It is the most effective way of dealing with societies where tax avoidance is a way of life. The wealthy who would otherwise avoid tax  must pay. Black market  money washing is made less profitable. It is more cost effective to collect VAT as a point of sale transaction than to try and collect income and manufacturing taxes.

 

2 hours ago, Base32 said:

Regressive taxation screws the lowest on the income ladder.  3% is no small bump - it's significant and it's going to hurt consumers. Looks like they are going to take the "boiling a frog" approach, like people won't notice. What they will end up doing is chilling the economy which will in turn make their tax revenues even less.  Let's see how Somchai Average reacts.

 

It is regressive only if blanket. Thailand has VAT exemptions which mitigate the impact on the poor. Food, public transport,  government services, basic housing  and health care is VAT exempt. Small merchants/market stalls do not charge VAT.

As per Section 81 of the Revenue Code Value added tax shall be exempt on the following businesses:

-sale of goods but not for export purpose or provision of services as follows:

-sale of agricultural products whether they are trunks, branch, leaf, bark, offshoot, root, bud, bulb, pod, seed or other parts of plants and their by- products in fresh or preserved condition in order to temporarily prevent from spoiling during transportation by chilling, frozen means or by other means or preservation to prevent from spoiling for retail sale or whole sale by chilling, frozen, drying , grinding, segmentation method or by other method, white rice or by-product from rice milling but not including wood, firewood or products from wood sawing or food products in can container or package processed on manufacturing basis in accordance with terms and conditions prescribed by the Director-General.

-sale of alive or dead animals, and in the case of non- alive animal whether it be flesh, parts of animal, egg, milk or by-product from animal in fresh or preserved condition to temporarily prevent from spoiling during transportation by chilling, frozen means or by other mean or preservation to prevent from spoiling for retail sale or wholesale by chilling, frozen, dried, grind, segmentation means, or by other means, but not including food product in can container or package done on manufacturing basis in accordance with terms and condition prescribed by the Director-General;

-sale of fertilizers;

-sale of fish meal , animal feed;

-sale of pharmaceutical or chemical products used on plants or animal for nourishing, preventing, destroying, or eliminating pesticide or disease of plants and animals,

-sale of newspaper, magazine or school books,

provision of educational services of public educational institutions, educational institutions under the law governing private universities or private schools under the law governing private school,

provision of services relating to art and cultural work in field and category of business as prescribed by the Director-General with the Minister’s approval,

provision of services in medical treatment, accounting, lawyer or other liberal professional services as prescribed by Revenue Department with Minister’s approval and governed by the laws governing such liberal professional services;

-provision of medical service of health institution under the law governing such health institution;

-provision of research or academic services as prescribed by the Director- General with the Minister’s approval;

-provision of services of library, museum, zoo;

-provision of services under employment contract;

-provision of services on organizing amateur sports;

-provision of services by public entertainer as prescribed by the Director- General with the Minister’s approval;

-provision of domestic transport;

-provision of international transport excluding transport by aircraft or ship;

-rental of immovable property;

-provision of service of local authority excluding commercial services of local authority or service generating income or benefit whether it is infrastructure business or not;

-sale of goods or provision of services of a ministry, department which remit all revenue to the state without deducting expenses;

-sale of goods or provision of services for the benefit of religions or public charity in Thailand and profits arising therefrom are not used for other purposes

 

- Small businesses with an annual turnover of less than 1.8 million baht are exempt from VAT registration. 

This means that the small market stalls where many low income Thais to their  shopping won't be charging VAT.

 

 

3 hours ago, kickstart said:

Farming is about Thailand's biggest industry ,how many farmers pay tax, the wife rears a few cattle has done for some yeras, yet to pay any tax ,we have some big sugar cane growers in the area income is a couple of million baht how much tax do they pay.

Not saying our Somchie with his 20 rie of rice should pay tax ,but a but a tax allowance system , pay tax after ay 60k income would work.

Dairy farmers pay tax after a 500k income most pay no more than 10 000 baht/year

actually agriculture is the lowest at about 8% of the GDP   

The service sector which includes tourism is about 58% then industrial which is about 38%

 

8 hours ago, Patong2021 said:

I am a supporter of VAT. It is a consumption tax,  a Value Added Tax.   It is the most effective way of dealing with societies where tax avoidance is a way of life. The wealthy who would otherwise avoid tax  must pay. Black market  money washing is made less profitable. It is more cost effective to collect VAT as a point of sale transaction than to try and collect income and manufacturing taxes.

Exactly.

Wealthy can easily structure themselves to legally avoid income tax but they need to spend their money.

Efficient and fair option to quickly collect tax is indeed to implement different VAT brackets progressively ranging from 0%/low rates for essential products and services to high rates for nonessential/luxury ones.

15 hours ago, daveAustin said:

Tax tax tax! I thought Taxin was in prison already. 

 

9 hours ago, Lee65 said:

Thailand moving closer to the West' economic model: tax & squander.

 

Totally agree!  Rampant corruption is a much better system.

 

 

 

 

 

/sarcasm....just in case it wasn't blatantly obvious

38 minutes ago, shdmn said:

Totally agree!  Rampant corruption is a much better system.

It is certainly not ideal but at least in a blatantly corrupted system everybody (lower class included) knows how things informally work and has access - at their own level - to it. In an apparently less corrupted society, corruption is called lobbying and only the happy few elite get the most benefits from it. There is no true fairness, select your poison.

10 hours ago, CallumWK said:

It may come as a surprise to you, but to develop a country you need money

 

Governments just need to get out of the way. Doesn't need much money except perhaps for a court system to enforce contracts, police, military, and maybe a couple other things (but not education). Then just let the free market take off.

 

14 hours ago, hotandsticky said:

I believe that the increase in VAT was announced over 15 years ago but deferred by successive governments; it was always a time-bomb.

Are you suggesting another potential flip-flop on this?  How could you!!! 

 

😹

First fleece foreigners as much as possible, but now the local population too?
That's the government we know.
Incidentally, during my 28 years here, I've seen them want to increase VAT at least four times.