Thailand Plans VAT Hike to 8.5% in 2028! #ThaiVat

Source: Thansettakij www.thansettakij.com

Thailand Plans VAT Hike to 8.5% in 2028, Says Finance Minister Ekniti.

Ekniti admits VAT hike to 8.5% planned for 2028 if the Thai economy recovers.

Deputy Prime Minister and Minister of Finance, Ekniti Nitithanprapas, revealed that in the Medium-Term Fiscal Framework (MTFF) for 2026–2030, which was approved by the Cabinet, the government outlined plans to strengthen fiscal capacity for long-term sustainability. One of these measures includes raising the Value Added Tax (VAT), which currently stands at 7%.

For the fiscal sustainability plan, the VAT increase is set to proceed gradually. In 2028 (B.E. 2571), VAT is scheduled to rise to 8.5%, on the condition that the Thai economy has returned to full potential by that time. The VAT rate is then planned to reach 10% in 2030 (B.E. 2573). Notably, the 10% VAT rate is already the legal standard, but the government has been applying a reduced rate of 7%.

However, if the Thai economy has not recovered sufficiently to support a VAT increase, the government has prepared alternative compensatory measures, such as raising other types of revenue or reducing government expenditures. These are clearly specified in the medium-term fiscal plan.

“The Thai economy is not ready for a VAT hike under the current conditions. Therefore, there is no plan to raise VAT this year or next year. And if the economy has not recovered enough by 2028, the government has already prepared fallback measures in the MTFF—such as increasing other forms of revenue or cutting expenditures,” Ekniti said.

The Cabinet has also assigned the Ministry of Finance and the Budget Bureau to draw up plans to reduce expenditures—especially repetitive or overlapping spending, such as duplicated welfare payments, which may need to be consolidated into a single system.

For investment expenditures, the government may shift to alternative financing channels instead of relying solely on the regular annual budget. These channels include state-owned enterprises, Public-Private Partnerships (PPP), and Infrastructure Funds.

Ekniti added that the main objective of the new medium-term fiscal plan is to demonstrate commitment to reducing the fiscal deficit. The current deficit stands at 4.4% of GDP, and the government aims to reduce it to below 3% by 2029 (B.E. 2572). The MTFF covers several key areas, including tax reform, expenditure reduction, the use of infrastructure funds to support investment, and fiscal discipline.

“Building confidence in the country’s fiscal position remains crucial. Recently, the fact that S&P Global Ratings did not downgrade Thailand’s credit rating is a result of the government’s strong commitment in this area,” he said.

📣 With tax enforcement tightening, foreign employees and employers in Thailand are encouraged to review their tax positions and seek professional tax advice for proper planning and compliance.

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