December 1, 2025
Dr. Rujira Bunnag
Naewna On Line,
Column of Rule, Regulation and Business
Publicized on Friday, November 28, 2025
Deputy Prime Minister Ekniti Nitithanprapas recently made a public statement to the media that the Value Added Tax (VAT) rate may be increased from the current 7% to 8.5% in 2028, and further to 10% in 2030, in case at that time the Thai economy is performing at its full potential.
This statement has caused significant shock among the public and business operators. Even though the VAT increase is conditional on the economy reaching its full potential, people were immediately alarmed upon hearing the announcement, particularly because the current economic situation is still in decline, despite the stated condition that the increase would only occur when economic conditions improve.
Thailand first adopted the VAT system in 1992, with the initial rate set at 10%. Nevertheless, in 1997, during a period of economic downturn, the government of that time issued a Royal Decree reducing the VAT rate to 7%. This reduced rate has been applied continuously to the present day.
When compared to VAT rates in neighboring countries, Thailand’s 7% rate is relatively low ranking as the sixth lowest in the world.
Meanwhile, several neighboring countries impose higher VAT rates, such as Singapore at 9%, Vietnam at 10%, and Indonesia at 12%.
The Deputy Prime Minister and Minister of Finance’s announcement has raised several political implications and questions. The current government is a temporary caretaker administration that is only expected to remain in power until the end of January 2026 or potentially even shorter should political events arise, such as the opposition party submitting a motion of no-confidence requiring a parliamentary vote. Prime Minister Anutin Charnvirakul has clearly stated that he will dissolve the House of Representatives before the scheduled constitutional amendment negotiations, MOA, with the Prachachon Party, and that he will exercise the dissolution power by December 2025, before those negotiations even begin.
Why, then, would the Deputy Prime Minister and Minister of Finance make a statement regarding future VAT policy so far in advance, for many years, when no one can say whether the current government will return to office to implement such measures?
The first political implication is that the Deputy Prime Minister and Minister of Finance appears confident that the current administration will return to govern for a longer term, and that he, himself, will once again be entrusted with long-term economic responsibilities.
The second implication is that the Deputy Prime Minister and Minister of Finance is still relatively inexperienced in political affairs. While he has an impressive background rising through the ranks of the Ministry of Finance as a career civil servant, he lacks political experience especially in making public announcements regarding sensitive matters such as future VAT increases at a time when the current economic situation is poor. His statement is considered a misstep speaking the wrong thing, at the wrong time, on an extremely sensitive issue that directly affects public sentiment and the political support base of the government’s key coalition parties.
The third implication concerns the current Prime Minister, who is cool and politically experienced. When the VAT-increase statement was made, the Prime Minister promptly countered it, saying that as long as he remains in office, he would not raise the VAT rate. This was seen as a swift and effective political response correcting the earlier misstep.
Despite receiving praise for reviving the “Khon La Khrueng Plus” co-payment scheme—originally introduced under former Prime Minister Prayut Chan-o-cha—the program cannot be considered an original initiative of the current government. Rather, the administration demonstrated courage in adopting a beneficial program from a previous government and updating it to suit current circumstances.
Nonetheless, following the severe flooding crisis in southern Thailand, particularly in Hat Yai, Songkhla Province, public confidence has been shaken. Although officials from all sectors have mobilized to assist, the scale of the natural disaster made immediate and there are many victims, comprehensive relief impossible. Some affected individuals have begun to feel that the government’s response has been too slow. Public approval, which had been strong in recent months, has noticeably declined.
It remains to be seen whether the current government will have the opportunity to return to power after the next general election, and whether it will be in a position to implement the advance VAT policy it has announced.
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