Thailand Extends VAT Rate Reduction to 7% Through September 2026

Thailand imposes value-added tax (“VAT”) on the sale and import of goods, and  provision of services, as a broad-based consumption tax. The standard VAT rate prescribed by law is 10%. However, since introduction of the VAT in 1992, the government has exercised its authority to reduce the VAT rate on an ongoing basis, in order to support economic stability.

Currently, the effective VAT rate is reduced to 7% through temporary Royal Decrees, and includes both:

• 6.3% VAT payable to the central government, and
• 0.7% local tax (an amount equivalent to 10% of the VAT rate), collected on behalf of municipalities and local administrative organizations.

This reduced VAT rate has been extended repeatedly as part of the government’s fiscal policy to ease the burden on businesses and consumers, stimulate domestic consumption, and support economic stability. As a result, although the statutory VAT rate remains 10%, in practice the applicable VAT rate in Thailand has been 7% for more than three decades.

The Director-General of the Thai Revenue Department announced that the current VAT rate reduction is due to expire on 30 September 2025. In order to maintain public confidence and support the country’s continued economic growth, the Ministry of Finance, through the Revenue Department, proposed the draft Royal Decree to extend the reduced VAT rate for one more year, from 1 October 2025 to 30 September 2026. Thereafter, on 9 September 2025¹, the Thai Cabinet approved in principle a draft Royal Decree issued under the Thai Revenue Code for extension of the reduction of the VAT rate to 7% (inclusive of local tax) for an additional year.

The Director-General explained that this extension aims to sustain domestic consumption levels, which in turn will help drive Thailand’s economic expansion, in line with the government’s targets. This measure is consistent with the government’s long-standing policy of maintaining the VAT rate at 7%, a practice that has been extended repeatedly in prior years to ease the tax burden on consumers and businesses while stimulating the economy. 

This article is intended to provide a regulatory overview only, and does not provide a comprehensive analysis or constitute legal advice. Should you have any questions on this or on other areas of tax law, please do not hesitate to contact our Tax Team at SCL Nishimura & Asahi Limited.

Areeya Ananworaraks
Counsel

Pairaya Yangpaksi
Associate

¹https://rd.go.th/fileadmin/user_upload/news/2568thai/news34_2568.pdf

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