Thailand to cut VAT rate to 6.3% in 2014 with rise to 9% in 2015

Thu 17th Jul 2014

The Thai government has announced a proposal to temporaily reduce the Value Added Tax rate from 7% to 6.3%.  If approved, the Thailand VAT cut would be introduced between 1 October 2014 and 30 September 2015.

There will be a new, local sales tax rate of 0.7% to be added, meaning the effective rate will remain at 7%.

There would then be a permanent rise to 9% from 1 October 2015.  There will also be a 1% charge of local sales tax, taking the combined rate to 10%

The current 7% rate was always intended as a temporary measure.  There have been numerous discussions to increase it back to 10%.  One of the reasons for the delay has been that the government had wished to remain competitive to Singapore, which has a 7% Goods & Services Tax rate.

This proposal is unexpected as the new military government had initially promised a freeze on the consumption tax.