Value Added Tax, or as better known as VAT, is a type of tax that is collected in the process of producing, selling products or services within our Thai market, and certain imported products from foreign countries. Currently, the Revenue Department is responsible for collecting and managing the VAT countrywide. Thai people are most familiar with the 7% VAT added to the products and services that they buy. However, recently there has been some mentionings of a possible increase of VAT to 10% in 2023. Is it true news? Let’s learn more and find out.
The collection of VAT in Thailand
As has been stipulated, the VAT is set at 7% adding on top of the products or services’ prices. But if we rechecked with the Thai tax law itself, we will find that 10% would be the maximum rate for VAT, according to the Revenue Code after the change of trade tax system into VAT since 1992. To support people’s living costs, the government has always set it at 7%; except for during the Asian economic crisis in 1997, where the VAT was levered to 10%.
As of today, there has been an announcement from the cabinet on August 24, 2021 on the continuation of the 7% rate on all products, services, and applicable imports. This mandate will still be effective until September 30, 2023. Therefore, it means that today we will still be paying the same VAT rate of 7% moving forward.
How do we prepare ourselves if the VAT is to be increased to 10%?
The news about the potential ramp-up of VAT from 7% to 10% still remains an uncertainty. We also can’t tell that after next year’s September, there will be a decree to continue the same VAT to ease people’s living costs burden. If VAT were to be reset to 10%, then Thai people will be encouraged to look at it from a developmental standpoint. The raised tax will be collected and managed to promote public education, elderly welfare, public health, national security, and public transportation, for example. Ultimately, it returns to the public in terms of national development for all who live in Thailand.
When things are inevitable, we may have to accept things as they happen and perhaps try to understand the underlying principle. Despite these speculations, most still trust that the government will still keep VAT to 7% rate to unburden households of Thai people. It is a matter to be followed up on as to which direction it will lead, and what impact on our livelihoods will transpire.
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