Bangkok: Restaurant operators are expressing concerns over the planned increase in value-added tax (VAT) from 7% to 8.5% in 2028, with a further rise to 10% in 2030, warning it could lead to higher living costs and contribute to inflation.

According to Thai News Agency, Mr. Sorathep Rojpojchanarat, president of the Restaurant Business Association, highlighted the potential impact of the government’s VAT increase plan. While he does not oppose the policy, he emphasized that a uniform VAT hike could worsen living expenses and inflation, given the food industry’s direct connection to the public.

In other regions like Europe and Japan, governments implement separate VAT rates, imposing a lower rate for food and restaurants to avoid negatively affecting consumers and businesses. However, in Thailand, small and medium-sized enterprise (SME) restaurants face the full burden of VAT on sales, as most food ingredients are exempt from VAT, leaving operators with no input tax offset and increasing their financial strain.

Furthermore, Mr. Sorathep pointed out that in many countries, the tourism sector, including hotels, benefits from lower VAT rates to attract visitors, suggesting that Thailand should adopt a similar strategy.

If the government moves forward with the VAT increase to 8.5-10%, Mr. Sorathep recommends maintaining a 7% VAT rate for restaurants, food products, and the tourism and hotel sectors. This approach could prevent elevated costs from affecting consumers and tourists, thereby avoiding economic stress and widespread negative consequences.