BANGKOK, Thailand – Deputy Prime Minister and Finance Minister Pichai Chunhavajira has addressed a proposal to revise Thailand’s value-added tax (VAT) structure, which includes introducing a 1% VAT rate for businesses with annual income between 1.5 million and 1.8 million baht. He stated that a comprehensive review of the entire VAT system is still underway, and no final decision has been made.
When asked whether the proposed change might place additional pressure on small businesses amid current economic challenges, Pichai declined to comment. He also did not provide a timeline for when the review would be completed, saying only that further study is necessary.
Pichai previously explained that the proposal is aimed at improving VAT compliance, noting that many small business owners underreport income to stay below the 1.8-million-baht threshold that currently exempts them from VAT. The suggested adjustment would introduce a lower-tier VAT rate for businesses earning at least 1.5 million baht annually, modeled after systems used in some European countries.
According to ministry estimates, the measure could help generate up to 200 billion baht in additional revenue. This would contribute to narrowing the government’s fiscal deficit, potentially reducing it from 4.4% of GDP to 3.5%.
The Finance Ministry is continuing to assess the economic impact and feasibility of the proposed changes before submitting any formal recommendations to the Cabinet. (NNT)
