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CONSUMPTION TAX

Govt maintains VAT at 7%

The Nation

BANGKOK: -- The Cabinet today resolved to maintain the 7 per cent value-added tax rate for another two years or September 30, 2014, citing fragile economic condition as a result of floods in 2011. From October 1, 2014, the 9 per cent VAT rate would be applied.

The Finance Ministry reasoned that the tax rate should be maintained for another two years, given the enormous flood impacts on the economy. Thailand in 2011 registered economic growth rate of only 0.1 per cent, against 7.8 per cent in the previous year. Keeping VAT at 7 per cent would spur purchasing power after the floods, to allow the normalisation of consumption and investment and stabilisation of the economy.

Earlier, Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong said that though the 7 per cent rate is relatively lower than those of many other countries, the government has worked diligently in including all parties into the taxation system. One solution is to reduce the corporate tax rate, as this would discourage companies from evading all types of taxes including VAT.

Thailand imposed the 10 per cent VAT in lieu of a variety of trade-related taxes in 1992. On April 1, 1999, the tax rate was temporarily cut to 7 per cent, to ease the impacts from economic crisis. VAT is the biggest tax revenue-generating item.

According to KPMG’s survey in 2007, average VAT rate in the European Union was 19.2 per cent, against 14.2 per cent in Latin American and 10.8 per cent in Asia Pacific.

-- The Nation 2012-08-07

[belg]

most of tax payers money goes to people who ... never pay any taxes or charges any VAT anyway...

[SGD]

Isn't the real rate 10% (the rate at which it was legislated when introduced) and 7% purely the discount rate post the 1997 Asian meltdown ?