VAT rate to be pegged at 7 percent for another year

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The Revenue Department has proposed the Finance Ministry to keep the value-added tax (VAT) rate at 7 percent for another year until the end of September 2017, citing the slow economic recovery and impact on business operators and the public if the VAT rate is raised.

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Revenue Department chief Prasong Poonthanet said Monday that the government, in the past year, has meted out various packages to help grassroots people who have been hard hit by drought while exports are contracting due to the global economic slowdown.

Increasing the VAT rate from 7 to 10 percent would add more burden on the consumers and increase the production costs of business operators, he noted.

Mr Prasong predicted that the collection of revenue taxes for the 2016 fiscal year would fall short of the adjusted target of 1.75 trillion baht by approx. 140 billion baht due to a substantial drop in petroleum taxes because of low oil prices.

However, he said the department would be able to meet next fiscal year’s target of 1.82 trillion baht in revenue tax collection in light of the forecast of economic expansion over the next 12 months.