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IMF Says Thailand Should Double VAT Rate

by Mary Swire, Tax-News.com, Hong Kong

08 June 2017


Thailand should gradually increase its value-added tax (VAT) rate to 14 percent from 7 percent to boost its tax revenues.

The IMF said that the country has a well-designed VAT system but one of the lowest rates for the tax in the world.

Increasing VAT could boost revenues by about 0.6 percent of GDP per percentage point increase in the rate, the IMF said.

It added that Thailand should mitigate the impact of the rate increase on vulnerable households.

Elsewhere in its new report for the country, the IMF said that Thailand should focus on increasing growth-friendly taxes and rationalizing tax incentives.

In March there was confusion in Thailand over remarks made by Prime Minister Prayut Chan-o-cha, after he appeared to suggest that the country would increase the seven percent VAT rate to eight percent to boost the government's coffers for the funding of various public projects.

However, following a popular outcry at the possibility, various government officials and the Prime Minister ruled out any changes. Prayut, in addition to Deputy Prime Minister Somkid Jatusripitak, subsequently stressed that there are no plans to increase the VAT rate.

Thailand's headline VAT rate is, in theory, 10 percent. However, the seven percent rate has been in force since 1999 to support economic growth.

TAGS: tax | value added tax (VAT) | Thailand

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