Due to the world economic slowdown and need to encourage domestic consumption, the Cabinet has approved the extension of the reduced VAT rate of 7% for another one year, until 30 September 2016. The draft Royal Decree for this extension will be passed to the Office of the Council of State for further legal review.
Although returning the VAT rate to the standard rate of 10% could be expected to generate additional revenue of around THB 221.9 billion, the Government is concerned about its impact on prices of goods and services and overall domestic consumption, as well as private sector manufacturing, imports and investment. The Cabinet therefore decided to extend the 7% VAT rate as part of its economic stimulus measures.
Further details of this measure and associated regulations have yet to be announced.
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