Thai govt mulls VAT increase as part of tax reform plans
Finance minister reckons increasing VAT from current 7% rate will boost revenue and address the income inequality problem
The government is studying the option of increasing value-added tax (VAT) from the current 7% rate, exploring the potential benefits and drawbacks to ensure public advantage, Finance Minister Pichai Chunhavajira said on Wednesday.
Pichai, who also serves as deputy PM, was elaborating on the remarks he made at the “Sustainability Forum 2025” held in Bangkok on Tuesday.
During the event, hosted by Krungthep Turakij newspaper, the minister revealed that he had instructed relevant agencies, including the Fiscal Policy Office, to review and potentially adjust the country’s tax structure to boost government revenue.
Among the proposed changes is a reduction in Thailand’s corporate income tax from 20% to 15%, aligning with the rate used by many countries to attract foreign investment. At the same time, he said, VAT could be increased, as Thailand’s current 7% is lower than the 15-25% range seen in other countries.
Thailand has maintained a 7% VAT rate since 1992, and while several past administrations have suggested raising it to 10%, the idea has not been implemented.
“Adjusting VAT is a sensitive issue. The first step is to ensure the public understands how an increase in VAT can help reduce the income gap between the rich and the poor through higher consumption taxes,” he said.
The minister explained that VAT is paid by all consumers, regardless of income, as it is based on spending patterns. If the tax rate remains low, the overall funds collected are smaller, limiting the government’s ability to fund public services.
“However, if VAT is increased, wealthier individuals will contribute more based on their spending, thus enlarging the central fund,” he said. “This will enable the government to channel this money to support public services like health, housing and education, as well boost the country’s competitiveness through infrastructure investments.”
As for how much the VAT will be increased, Pichai said detailed studies and consideration are required.
“The new rate must be sustainable and fair to all parties,” he said. “We are currently gathering feedback from all sectors and the implementation will be gradual, though not too slow.”
