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Thai Government Denies VAT Increase 'Plan'

by Mary Swire,, Hong Kong
Tuesday, March 14, 2017

There has been confusion in Thailand over remarks made by Prime Minister Prayut Chan-o-cha, after the premier appeared to suggest increasing the seven percent VAT rate to eight percent to boost the government's coffers for the funding of various public projects.

The Prime Minister was quoted in the national media as saying: "The VAT has been at seven percent for many years. If we increased it by just one percent then the country would have an increased income of THB100bn (USD2.8bn). So I need to ask: Can you sacrifice it or not?"

However, following a popular outcry at the possibility, various government officials and the Prime Minister himself have distanced the Government from the comments, arguing that the intention was merely to explain how much additional revenue would be generated by a one percent increase in VAT, and that the remarks had been twisted by the media.

Prayut, in addition to Deputy Prime Minister Somkid Jatusripitak, subsequently stressed that there are no plans to increase the VAT rate at this time. Finance Minister Apisak Tantivorawong has also reportedly stated that the current rate will be extended for a further year from September.

The International Monetary Fund in June 2016 welcomed the general direction of the Thai Government's tax policies, but urged it to increase the value-added tax rate to 10 percent.

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.

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