BANGKOK: The International Monetary Fund (IMF) has advised Thailand to gradually increase the rate of its value-added tax (VAT) to 10 percent from seven percent.
The adjustment should only be made when Thailand’s economic recovery is well entrenched, and programs should be introduced to mitigate the impact on vulnerable groups, the IMF said in its 2015 Article IV consultation report for the country. The Thai Government had planned to raise the VAT rate by one percent at the end of this year, but the plan was abandoned when lawmakers sided with business leaders who said the economy is too fragile.
Thailand’s headline value-added tax rate is, in theory, ten percent. However, a seven percent rate has been in force since 1999. This seven percent rate was extended again in July 2014 until at least September 2015, on account of civil unrest in the nation and a slowing economy. The IMF report said that a stronger revenue base would lead to a critical strengthening of Thailand’s fiscal position and allow for higher infrastructure spending and provide for the needs of an ageing population in the coming years.
