Anutin Reaffirms VAT Still at 7% After Finance Ministry Floats Hike for 2028–2030, Says Economy “Not Ready”

On 21 November 2025, details about Thailand’s proposed value-added tax (VAT) increase resurfaced after the adjustment was formally included in the Medium-Term Fiscal Framework (MTFF) for 2026-2030, which the Cabinet has already approved. However, on 20 November, Prime Minister and Interior Minister Anutin Charnvirakul firmly stated that he would not allow any VAT increase as long as he remains responsible for steering the country’s administration. On the following day, Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas provided further clarification on the policy in a report released to the public.

According to the MTFF, the Ministry of Finance has outlined a timeline to “gradually restore the VAT rate to the level prescribed by law.” The rate, currently reduced to 7%, is set to rise to 8.5% in 2028 and then to 10% in 2030, the maximum rate allowed under the law. Ekniti acknowledged that increasing VAT is one of the key measures to strengthen the government’s medium-term revenue capacity.

However, the Finance Ministry emphasized that a VAT increase will only occur when the Thai economy has returned to its full growth potential. It reiterated that no VAT hike will take place in 2025 or 2026. Should the economy remain too weak by 2028, the government has already prepared alternative measures within the MTFF, ranging from boosting revenue through other channels to tightening public expenditure.

The MTFF aims to reduce Thailand’s fiscal deficit to below 3% of GDP by 2029, down from the current level of 4.44% of GDP. Meanwhile, government revenue as a share of GDP has steadily declined, from 17% in 1993 to 14.9% in 2025, while mandatory expenditures account for 70-80% of the total budget, significantly shrinking the space for public investment.

Persistent deficits and the surge in public borrowing during the COVID-19 period have pushed Thailand’s public debt ratio close to the 70% ceiling. Major global credit rating agencies have expressed concern, adjusting Thailand’s Outlook in a signal that the country may face a downgrade if fiscal risks continue to rise.

Prime Minister Anutin reiterated on 20 November that now is not the right time to raise VAT, stating, “As long as I play a role in setting the country’s direction, VAT will remain at 7%.” His stance aligns with concerns from the business sector, especially restaurant operators, who have urged the government to maintain the 7% rate to prevent cost pressures from being passed on to consumers.

Anutin explained that Thailand is still in a period of economic and social recovery. The government must support purchasing power and protect economic competitiveness before considering tax measures that could burden the public during a fragile recovery. He also clarified that although the law stipulates a default VAT rate of 10%, Thailand has long applied a reduced rate of 7% via a legal exemption. The MTFF figures, therefore, serve merely as a legal reference, not an immediate plan for implementation.

Beyond VAT, the MTFF promotes broader fiscal reforms, including the use of digital systems and Big Data/Data Lake to expand the tax base, reviewing certain tax deductions, studying outbound travel tax collection, and imposing import duties on low-value goods under 1,500 baht. On the expenditure side, the framework calls for reducing redundant spending, aligning budgets with current conditions, and increasing investment through state-owned enterprises, PPP projects, and infrastructure funds to ease direct budgetary pressure.

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Source of material: official media /online news