Thailand: Cabinet standing pat on 7% VAT until 2019

  • The cabinet has approved the extension of the 7% value-added tax (VAT) rate for another year until 30 Sep 19 to maintain the country’s economic stability.
  • Nathporn Chatusripitak, an adviser to the PM’s Office Minister, said on 3 Jul 18 the extension is estimated to cost the government THB258bn in lost revenue from tax collection until 30 Sep 19.
  • The 7% tax rate, which has been extended several times, was set to expire on 1 Oct 18.
  • The VAT was first introduced in 1992 at a rate of 10%, but was slashed to 7% in late 1997 at the private sector’s request. The rate has been kept at 7% ever since.
  • Mr. Nathporn said the Finance Ministry proposed the 7% VAT rate be maintained for another year, as a hike could hamper private consumption and raise the prices in goods and services, impeding the country’s economic growth.
  • “The Thai economy is now in an uptrend, while farm prices are increasing,” he said. “Any VAT hikes may possibly derail such trends.”
  • The ministry also reported that government expenditure and public investment are expected to increase, while planned large-scale infrastructure projects, the development of the Eastern Economic Corridor and special economic zones have made good progress.
  • In a related development, the cabinet approved a draft bill to establish a Pracha Rat Fund for low-income earners. It will function as a revolving fund to ease potential harm to low-income earners.
  • The cabinet also approved the allocation of THB2.7bn from its 2018 fiscal budget to finance the Pracha Rat Fund.

External Link: https://www.bangkokpost.com/business/news/1496982/cabinet-standing-pat-on-7-vat-until-next-year

4-Jul-2018


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