The Senate’s Economic, Monetary and Fiscal Affairs Committee has proposed a sweeping tax reform package, including a potential increase in value-added tax (VAT), to address rising public debt that could approach or exceed legal limits in the coming years.
Chaired by Senator Kamphon Suphaphaeng, the committee has finalised its study and is set to submit the report to the Senate for approval before forwarding it to the cabinet.
The report points to persistent fiscal deficits over the past decade, averaging around 4% of GDP—above the 3% ceiling under the fiscal sustainability framework. It attributes the shortfall to politically driven tax policies that have failed to generate sufficient revenue to match increasing government spending.
Looking ahead, the panel warned that public debt could rise significantly between 2027 and 2029, potentially breaching statutory limits and forcing additional borrowing, highlighting the urgency of tax reform.
Key recommendations include modernising tax administration with advanced technologies such as artificial intelligence, and restructuring the Revenue Department into an independent national tax agency with its own governing board to reduce political influence.
The committee also proposes creating a unified database requiring all income earners to register, linking tax records with welfare, public payroll, and social security systems. Additional measures include increasing child tax deductions to 500,000 baht per child and introducing tax-deductible savings accounts for families.
E-commerce platforms would be required to withhold 2% income tax at source, while dividend income exceeding 10 million baht would be subject to progressive taxation. Startups would benefit from tax exemptions during their first three years. The plan also targets foreign digital companies such as TikTok, eBay, and Alibaba Group, proposing a 20% corporate tax on locally generated income regardless of physical presence.
On the consumption side, the committee recommends raising VAT from 7% to 10% to help fund social welfare programmes and support an ageing population. Other proposals include mandatory e-tax invoicing, a “receipt lottery” to improve compliance, and removing VAT exemptions for small businesses.
Additional measures include taxes on stock trading and gold transactions, higher levies on idle land, revised billboard taxes, and stricter inheritance tax rules requiring payment within 150 days of death. The panel also suggested exploring a “Home Town Tax” system and granting local authorities greater power to generate revenue independently.
The proposals are expected to spark debate over their potential impact on businesses and consumers.