Thai Senate committee proposes a 3% VAT hike in new tax reform
Thailand’s Economic, Financial and Fiscal Affairs Committee of the Senate proposed a tax reform plan to address the country’s fiscal deficit and rising public debt, including a proposal to raise value-added tax (VAT) from 7% to 10%.
The committee, chaired by Kamphol Supapaeng, discussed the tax restructuring plan yesterday, April 19, as part of efforts to tackle long-term fiscal challenges. If approved, the recommendations will be submitted to the Cabinet for consideration and possible implementation to ease ongoing fiscal pressure.
The committee said Thailand has recorded continuous budget deficits over the past 10 years, averaging 4% of GDP. That level is above the fiscal sustainability threshold of 3%.
It also warned that public debt could approach or exceed the legal ceiling between 2027 and 2029, forcing the government to continue borrowing to cover deficits.
Under the proposed Thailand tax reform, the first set of measures focuses on consumption-based taxes. The committee proposed increasing VAT from 7% to 10% to help fund welfare spending for an ageing population.
The VAT increase was previously proposed in February, but was rejected by the ruling Bhumjaithai Party. Party members said such an increase would not happen in the next two to three years.
The party said the decision was based on the government’s focus on supporting living costs while the economy has not fully recovered. It has not yet issued a statement on the renewed proposal.
The committee also called for taxes on stock trading and gold transactions, covering both physical gold and paper gold, and for the removal of the VAT exemption for businesses earning less than 1.8 million baht a year.
The second measure targets income-based taxation. The committee proposed a 2% withholding tax on e-commerce platform sales and a 20% corporate tax on foreign digital companies such as TikTok, Alibaba and eBay. It also suggested adopting a global minimum tax of at least 15% by 2027.
The third measure covers property taxes, including higher rates on unused land and an expanded signage tax to include all outdoor advertising and political greeting signs during festivals.
For its fourth proposal, the committee called for the use of artificial intelligence (AI) to improve tax collection efficiency at the Revenue Department.
It also proposed welfare and labour changes to address Thailand’s ageing society. These include extending the retirement age from 60 to 65 by 2030 and raising child tax deductions to 500,000 baht per child to encourage higher birth rates.
The meeting also discussed a receipt lottery system to encourage consumers to request electronic tax invoices from businesses. Another proposal, the Home Town Tax policy, would allow taxpayers to allocate donations to local areas for community development.
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