The cabinet has approved an extension of the 7% value-added tax (VAT) reduction for another year, aiming to alleviate the impact of the cost of living and boost consumer spending.
According to Jirayu Houngsub, the prime minister’s adviser on public relations, the cabinet on Tuesday decided to extend the reduction in the VAT rate of 6.3% (excluding local taxes) or 7% (including local taxes), effective from Oct 1, 2024, to Sept 30, 2025. It was set to end in two weeks.
The extension aims to mitigate the impact of living costs, stimulate consumer spending and boost business confidence in the Thai economy.
According to the Finance Ministry’s study, extending the 7% VAT reduction for another year will unlikely result in more revenue losses for the state. It will not impact the government’s revenue estimates for fiscal 2025, as the budget estimates were based on a VAT rate of 7% (including taxes).