Prime minister Paetongtarn Shinawatra has added her voice to growing criticism regarding the Finance Ministry’s proposal to increase the value-added tax (VAT) from the current 7% to 15%.
When asked about the potential hike, she expressed understanding for the adverse effects such an increase could have on the public. She indicated that Finance Minister Pichai Chunhavajira would soon provide further details about the proposal.
On Wednesday, Mr. Pichai clarified that the ministry is currently examining the possibility of raising the VAT rate. “We are studying global tax trends and assessing the potential benefits and drawbacks to ensure the most advantageous outcomes for the public,” said Mr. Pichai, who also holds the deputy prime minister position.
The VAT, which has been a significant source of government revenue, has remained at 7% since 1992. Various administrations have previously suggested increasing it to 10%. Mr. Pichai emphasized the need to gather public feedback before settling on any specific figure, stating, “We need to gather opinions from various sectors because a VAT increase would impact the people.”
During his comments at the Sustainability Forum 2025 in Bangkok, he also discussed global tax trends, noting that the Organisation for Economic Co-operation and Development (OECD) has introduced guidelines mandating a 15% corporate income tax for all businesses. He suggested that Thailand should comply and consider lowering its current rate of 20%.
Regarding personal income tax, Mr. Pichai pointed out the global competition for skilled labor, mentioning that many countries have reduced their tax rates while Thailand continues to impose a maximum of 35%. He noted that while the personal income tax base in Thailand is low, the consumption tax base is relatively high and requires adjustment.
Currently, Thailand’s VAT is set at 7%, with a maximum of 10%. Worldwide, VAT rates vary from 15% to 25%. “Consumption taxes are a sensitive issue. However, a reasonable increase could help low-income individuals. By collecting taxes uniformly, we could narrow the wealth gap,” he said.
“If the rate is kept low, the overall revenue will be diminished. Conversely, an increase would mean that wealthier consumers contribute more based on their spending, leading to higher overall revenue, which could be directed toward assisting low-income groups and improving infrastructure to enhance competitiveness.”
He also mentioned the need for the government to focus on increasing savings, particularly given the aging population. While Thailand has savings from social security and provident funds, these resources may deplete rapidly as people retire.
Lavaron Sangsnit, the permanent secretary for finance, stated that any significant tax restructuring would require strong political will and adequate economic recovery. “Timing is crucial,” he noted.
Opposition to the VAT increase was voiced by People’s Party deputy leader Sirikanya Tansakun, who expressed concern on X about the impact on salary workers and the middle class. “Is a 15% VAT increase excessive?” she asked.
Thanakorn Wangboonkongchana, deputy leader of the United Thai Nation Party, also denounced the proposal, arguing it would lead to higher prices for goods and services.
On September 17, the cabinet approved an extension of the 7% VAT reduction for another year to ease the burden of rising living costs and encourage consumer spending. Government spokesman Jirayu Houngsub announced that the VAT reduction of 6.3% (excluding local taxes) or 7% (including local taxes) would continue until September 30, 2025. This extension aims to alleviate living cost pressures and boost business confidence in the Thai economy.
