Pichai rules out VAT hike to 15%, considers product-based tax reform

FRIDAY, DECEMBER 13, 2024

Finance Ministry ‘exploring ways to modernise tax structure’

 

The Thai government has firmly dismissed speculation of a steep increase in the value-added tax (VAT) rate to 15%. 

 

Finance Minister Pichai Chunhavajira has outlined plans to carefully consider a more nuanced approach to tax reform, potentially involving product-based tax rates.

 

In a television interview on Friday, Pichai emphasised that the Ministry of Finance is currently exploring options to modernise the country’s tax structure. 

 

While acknowledging the global trend of increasing tax rates to address inequality and reduce national debt, he stressed that any changes to Thailand's VAT system would be implemented cautiously and in line with the country's economic conditions.

 

The minister identified three key areas of focus for VAT reform:

  • Product-based tax rates: Implementing differentiated tax rates based on the type of product, with luxury goods potentially subject to higher rates.
  • Global trends and economic context: Aligning Thailand's VAT policy with global trends while considering the nation's economic health.
  • Social equity and infrastructure investment: Allocating additional revenue generated from VAT to support low-income groups and fund infrastructure projects to reduce the cost of living.

 

Pichai clarified that the 15% figure was merely a hypothetical number used to stimulate discussion on global tax practices. He assured the public that the government is committed to a balanced approach to tax reform that promotes both economic growth and social equity.