Thai Prime Minister Scraps Thailand Tax Plan, Promises New Measures to Improve Economy

In December 2024, Thai Prime Minister Paetongtarn Shinawatra turned down the proposed 15% Value-Added Tax (VAT) Plan suggested by her finance minister not long before. While the plan itself intended to increase investment and combat inequality in Thailand, it was met with negative reception from the general public and politicians alike.

She instead proposed her own measures for the coming months and years to tackle Thailand’s sluggish economy, high household debt, and cooling investment.

What was the 15% VAT Tax Plan?

VAT is a major source of government revenue and increasing the rate would lead to more government funding for public services such as healthcare and infrastructure investment. If the 15% VAT Tax Plan were approved, it would have increased the VAT amount from 7% to 15%, making this the first time it has risen since 1992. This would enhance Thailand’s economy and make it more competitive globally while improving the lives of its citizens.

The new tax proposal, supported by Pichai Chunhavajira, the finance minister and deputy prime minister, intended to lower corporate income tax from 20% to 15% and bring it in line with international standards. Personal income tax rates were also slated for a reduction, with a specific mention of the highest tax rate of 35%. This reduction was planned to attract highly skilled professionals from overseas to work in Thailand in high-paying positions.

Why the Tax Plan Was Rejected

To reject the plan, Mrs. Paetongtarn held a formal meeting with her economic advisors and Mr. Pichai at the Government House in Thailand. During the meeting, the Thai Prime Minister expressed her disapproval of the tax plan, highlighting the negative impact that increased prices would have on the general public and tourism.

The VAT increase was also opposed by the United Thai Nation, a military-backed party, which cited that the increased VAT will drive up pricing for various goods and services in Thailand, potentially putting them out of reach for lower-income earners. Sirikanya Tansakun, an MP from the People’s Party, also criticized the plan and stated that more clarity is needed regarding the proposed changes.

PM Proposes Alternative Measures for Improving the Thai Economy

Ms. Paetongtarn reported that the Thai Finance Ministry is still evaluating ways to reform Thailand’s current tax landscape while further addressing the country’s social inequality and international competitiveness. Urgent changes are necessary as the economy faces rising household debt, stricter lending conditions, and reduced consumption.

Despite scrapping the new tax plans, Ms. Paetongtarn proposed new measures to boost Thailand’s economy without the drawbacks of the rejected VAT plan. During a televised address she laid out her plans, which include:

• Soft loans for community businesses
• Funding for Thai villages
• Affordable housing for lower-income workers living in Bangkok
• Reductions in energy prices
• A flat rate for rail travel in cities
• Regulate underground businesses, which make up 49% of Thailand’s GDP

Contact Siam Legal for Professional Tax Advisory Assistance

If you’re uncertain about your tax responsibilities as a foreigner and want to avoid problems with the Thai Revenue Department, reach out to Siam Legal International’s professional tax advisors for assistance in filing your taxes swiftly and correctly.

As a full-service law firm with over 20 years of experience in Thailand, our advisors have the skills and expertise to determine your responsibilities and all the legal ways you can reduce your tax burden. We’ll handle your taxes correctly so you can keep as much of your money as possible and avoid any complications.

Contact Siam Legal to enjoy a comfortable stay in Thailand with peace of mind knowing that your tax responsibilities have been properly managed so that there will be no penalties or fines in your way.

Category: Thailand Tax