Thailand
Thailand: Cabinet approves VAT extension
The cabinet on Tuesday approved the extension of the 7% value-added tax (VAT) rate for another two years to help reduce the financial burden of consumers, enhance business confidence and boost economic recovery.
Rachada Dhanadirek, a deputy government spokeswoman, said the 7% VAT will be retained until Sept 30, 2023.
The 7% tax rate, which has been extended several times, was set to expire on Sept 30 this year.
The VAT was introduced in 1992 at a rate of 10%, but was slashed to 7% in late 1997 at the private sector’s request.
The rate has been kept at 7% ever since.
According to Ms Rachada, the 7% VAT extension is unlikely to greatly affect the state revenue collection during fiscal 2022 and 2023.
The Finance Ministry told the cabinet on Tuesday that since the third quarter of 2020 the Thai economy has been drastically affected by the pandemic, with a slump in private consumption, weakened consumer confidence and a sharp decline in tourism revenue. Those factors are expected to cause the Thai economy to miss the ministry’s 1.5-2.5% growth target for this year.
In a separate development, the cabinet on Tuesday instructed the Tourism Authority of Thailand and the Tourism and Sports Ministry to revise the new phase of “Rao Tiew Duay Kan” (We Travel Together), a subsidy for hotels, and “Tour Teaw Thai”, which provides 40% compensation for domestic tour packages of up to 5,000 baht.
Ms Rachada said the two state agencies were instructed to reconsider the viability of the two tourism stimulus schemes. If the agencies could not implement new phases of the two schemes by October this year, they should propose the cabinet scrap the projects and transfer the unused budget to the National Economic and Social Development Council, which acts as the screening committee for the 1-trillion-baht emergency loan decree.
The new phases of the two schemes have been subject to delay since April.
The cabinet also allowed the Export-Import Bank of Thailand to raise its registered capital by 4.18 billion baht to support the investments of small and medium-sized enterprises, not only in Thailand but also abroad, focusing mainly on Cambodia, Laos, Myanmar and Vietnam, as well as new markets such as Indonesia, Malaysia and the Maldives.
Source: https://www.bangkokpost.com/business/2170583/cabinet-approves-vat-extension