What To Know
- Thailand’s caretaker Cabinet has officially ruled to extend the current 7 per cent value‐added tax (VAT) rate for one more year, stretching from October 1, 2025 to September 30, 2026, in order to alleviate pressure on households and cushion the broader economy.
- The extension of the 7 per cent VAT rate is more than just a tax policy tweak—it signals that the current authorities recognize how sensitive the public and businesses have become to cost pressures.
Bangkok Business News: VAT Rate Frozen for Another Year to Soft‐Peddle Economic Shock
Thailand’s caretaker Cabinet has officially ruled to extend the current 7 per cent value‐added tax (VAT) rate for one more year, stretching from October 1, 2025 to September 30, 2026, in order to alleviate pressure on households and cushion the broader economy. The extension was confirmed by Deputy Finance Minister Julapun Amornvivat, who stressed that delaying the decision until the incoming government under Prime Minister Anutin Charnvirakul would risk exposing consumers to the full 10 per cent rate starting October 1. This Bangkok Business News report also reveals that this move is seen as necessary to avoid a sudden spike in costs for goods and services during what many see as an already fragile recovery.
Cabinet extends 7 percent VAT for another year to ease pressure on Thai consumers
Image Credit: AI-Generated
Avoiding a VAT Hike During Fragile Recovery
Julapun said that the caretaker Cabinet was deeply concerned about the fallout for ordinary people if the VAT jumped, especially in light of current economic headwinds. The 7 per cent rate has been preserved as a buffer to protect spending power and consumer confidence, which have shown signs of strain. While some sectors and analysts have warned of inflationary pressures, many welcomed the decision as a relief, preventing what could have been a sharp increase in living costs.
Other Economic Oversight and Budget Behaviour
In addition to the VAT decision, Julapun confirmed that the caretaker Cabinet acknowledged a recent State Audit Commission report on the 10,000‐baht handout project. According to the report, that stimulus initiative “boosted the economy” and was carried out “within the framework of financial and budgetary discipline.” Meanwhile, regarding the recent appreciation of the Thai baht, the Deputy Minister said the government will leave comments to the new administration.
Why It Matters and What Comes Next
The extension of the 7 per cent VAT rate is more than just a tax policy tweak—it signals that the current authorities recognize how sensitive the public and businesses have become to cost pressures. By holding off on the increase to 10 per cent, the government hopes to maintain spending, prevent erosion of purchasing power, and avoid ripples of discontent especially among lower‐ to middle-income groups.
Looking ahead, market observers will keep close watch on how the new government handles fiscal policy, inflation risk, and whether any compensatory policies will be rolled out. If the baht continues to strengthen or import prices change significantly, that could put pressure on exporters and consumers alike. The confirmed budget discipline around stimulus programmes may help maintain investor confidence, but only if future projects are equally transparent and effective.
The extension of VAT to 7 per cent may seem like a temporary reprieve, but it could have lasting implications for Thailand’s economic trajectory over the coming year. If managed well, it may support fragile demand; if not, risks of rising costs and weakened consumer sentiment could still emerge, especially with global headwinds and currency fluctuations. for the latest news, keep on logging to Bangkok Business News.
