BANGKOK, THAILAND – Thailand’s finance ministry set out a timetable to raise value-added tax to its legal ceiling by 2030 in a bid to repair public finances and reassure investors.
Step-by-step VAT rise to legal ceiling
Finance minister Ekniti Nitithanprapas presented the plan at the Money Expo 2025 in Bangkok, saying the value-added tax would climb to 8.5 percent by 2028 before reaching the statutory maximum of 10 percent by 2030. The gradual increase formed part of the government’s medium-term budget framework.
“I believe that Thailand can return to its full growth potential by 2028. That could be the right time to start the gradual increase of value-added tax,”
said Ekniti, the finance minister.
The cabinet had already approved the roadmap on 18 November, signaling that shopping and everyday spending in Thailand would become steadily more expensive in the coming years.
Rating downgrades drive fiscal urgency
Behind the move lay concern over the country’s fiscal position after rating agencies Moody’s and Fitch cut their outlook on Thailand from “stable” to “negative.” Officials linked the shift to a high budget deficit of 4.4 percent, well above the commonly cited international benchmark of 3 percent.
By 2029, the government aimed to push the deficit back below the 3 percent threshold. The higher VAT rate was intended to help restore investor confidence and support Thailand’s credit standing.
Spending cuts and structural reforms
Beyond tax measures, the administration planned to curb expenditure by merging overlapping social programs across different agencies. A so-called “big brother helps little brother” scheme with tax incentives was designed to encourage large corporations to support smaller firms.
The government also worked on a concept for retirement savings accounts modeled on the Stock Exchange of Thailand, indicating a broader push for far-reaching reforms to the fiscal and social security system.
Rising costs for residents and visitors
For tourists and residents alike, the changes meant higher living costs as every purchase, hotel stay and restaurant meal became more expensive. While the government stressed the need for fiscal consolidation, officials acknowledged that ordinary people would initially have less disposable income.
Thailand prepared for economically challenging years ahead, with citizens expected to contribute through higher taxes as authorities sought to stabilize the budget and reassure markets.
Impact on expats and foreign tourism
The authorities framed the VAT hike as a tool to regain investor trust by strengthening public finances. At the same time, the government recognized that rising prices would increase cost pressures on foreign holidaymakers and expatriates living in Thailand, adding another layer of adjustment to the planned reforms.