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Thailand Pledges Not To Increase VAT Rate

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

15 December 2010


In a rebuttal of some media reports, Thailand’s Prime Minister, Abhisit Vejjajiva, has confirmed that the government still has no plans to increase the country’s value added tax (VAT) from its present rate of 7% to 10%.

The standard rate of VAT in Thailand is made up of a national 6.3% rate and a municipal component. That rate was actually due to increase to 10% last October but, before then, it was said that the government saw no point to an increase in the tax in the near future, while the strength of the economic recovery still remained uncertain.

At that time, the Finance Minister, Korn Chatikavanij, disclosed the government had agreed a two-year extension of the 7% VAT rate, in an effort to keep businesses’ production costs stable during the recovery period. The extension would have been effective until end-September 2012.

However, Abhisit has now gone further and guaranteed the present VAT rate for the next ten years. He said that the Ministry of Finance is planning a reform programme that would, over the next five years, increase tax revenues and balance the country’s budget.

TAGS: tax | economics | business | value added tax (VAT) | fiscal policy | Thailand | tax rates

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