The Thai cabinet has approved an extension of the 7% value-added tax (VAT) rate for another year, aiming to ease the burden of living costs and boost consumer spending. The decision, announced on Tuesday, will keep the VAT rate at 6.3% (excluding local taxes) or 7% (including local taxes) from October 1, 2024, to September 30, 2025. The extension comes just two weeks before the previously set end date.
Jirayu Houngsub, the prime minister’s adviser on public relations, explained that the goal of the extension is to stimulate consumer spending while also improving business confidence in Thailand’s economy. The VAT reduction is seen as a necessary measure to support both individuals and businesses in the current economic climate.
A study conducted by the Finance Ministry indicates that extending the VAT rate will not significantly affect the state’s revenue. According to the report, the revenue estimates for fiscal 2025 were already based on the assumption of a 7% VAT, and as such, the continuation of this rate should not result in further revenue loss for the government.
The decision is part of broader efforts by the government to manage the economy and keep inflationary pressures under control. With rising living costs continuing to challenge many households, the cabinet’s approval of the extension reflects its commitment to providing financial relief.
