BANGKOK — The Cabinet has approved an extension of the reduced value-added tax rate, keeping it at 7 percent for another year in light of current economic conditions, Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas announced.

Thai Government Extends 7% VAT Rate for Another Year to Support Economy

The rate, previously set to expire at the end of September 2026, will now remain in place until September 30, 2027. The decision follows a government assessment that economic conditions are not yet suitable for an increase, despite earlier plans to gradually raise the VAT rate as part of the country’s medium-term fiscal framework.

Ekniti said the extension reflects the government’s cautious approach to tax policy during a period of global economic uncertainty. While Thailand’s economy has shown signs of recovery following the pandemic, growth remains uneven, and household debt levels are high. Raising the VAT rate at this juncture, the minister argued, could dampen consumer spending and slow the recovery.

The standard VAT rate in Thailand is legally set at 10 percent, but successive governments have kept it at 7 percent through cabinet resolutions and emergency decrees for nearly three decades, making the reduced rate effectively permanent in practice. Any move to raise the rate back to the statutory level would be politically sensitive, particularly with an election approaching.

Senators clash over proposal to raise VAT to 10%

BANGKOK — A senator has criticised a proposal to increase value-added tax (VAT) from 7% to 10%, saying it is not the role of the Senate and warning the move would worsen the burden on the public.https://t.co/NcQAHTqih0#Thailand pic.twitter.com/WzeuEU9N9k

— Khaosod English (@KhaosodEnglish) April 20, 2026

The government has stated that it will continue to follow its medium-term fiscal framework, which includes plans to gradually raise the VAT rate as economic conditions permit. However, no timeline for such an increase has been provided, and the latest extension suggests that the 7 percent rate will remain in place for the foreseeable future.

For businesses and consumers, the extension provides certainty. Retailers can continue to price goods and services without the disruption of a tax increase, and households can budget knowing that the cost of everyday purchases will not rise due to VAT. For the government, however, the extension represents forgone revenue at a time when public finances are under pressure from high levels of debt and spending demands.

Thai PM Asserts No Plan to Increase VAT to 15%

The VAT extension is the latest in a series of measures aimed at supporting the economy while maintaining fiscal discipline. Whether the government will be able to raise the rate before the next election remains an open question. For now, the 7 percent VAT rate is here to stay, at least until October 2027. What happens after that will depend on how quickly the economy recovers — and how willing any government is to ask Thais to pay more.

-Thailand News (TN)