Thai govt to hike VAT to 10% by 2030 in budget rescue plan
The government plans to gradually raise VAT to 10% to address rising deficits, as revealed by the finance minister during a major economic event in Bangkok.
Finance Minister Ekniti Nitithanprapas revealed plans to gradually increase VAT, starting with a 1.5% rise to 8.5% by 2028. The announcement was made during his address at the Money Expo 2025 Bangkok Year-End, where he stressed the need for fiscal reform to safeguard the country’s economic stability.
The proposed VAT hike is part of the Finance Ministry’s medium-term fiscal framework (MTFF), approved by the Cabinet on November 18. The MTFF aims to restore investor confidence, both domestic and international, by showing that the government is serious about tightening its financial belt.
“If increasing the VAT rate proves challenging, the ministry will implement other measures to assure investors of the country’s fiscal strength.”
Ekniti pointed out that Moody’s and Fitch Ratings recently downgraded Thailand’s economic outlook from stable to negative, citing fiscal deficits that exceed international norms. In the last fiscal year, Thailand posted a deficit of 4.4%, far above the 3% guideline. S&P Global Ratings, however, has maintained a stable outlook, trusting in the government’s fiscal-discipline roadmap.
The MTFF targets reducing the fiscal deficit to under 3% of GDP by 2029. To achieve this, the ministry is preparing a range of tax reforms, including the VAT hike, expenditure cuts, and strategies to leverage the Thailand Infrastructure Fund and expand public-private partnerships.
Cost-cutting measures include a Cabinet directive to eliminate redundant spending. One plan under review is the consolidation of overlapping welfare schemes into a single, streamlined system using shared government data.
Ekniti also confirmed that a new stimulus package aimed at small and medium-sized enterprises (SMEs) is in the works. The package will offer loans, loan guarantees, tax perks, and initiatives to help SMEs win government procurement contracts, according to Bangkok Post.
Another initiative, dubbed the “big brothers help little brothers” programme, will encourage large corporations to support SMEs in exchange for tax incentives.
The government plans to revamp retirement savings by introducing the Thailand Individual Savings Account, replacing several existing funds to make long-term saving more efficient and appealing.
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