Bangkok: The Ministry of Finance has announced plans to increase the Value Added Tax (VAT) to 8.5% by 2028, before further raising it to 10% in 2030. Deputy Prime Minister and Minister of Finance, Ekniti Nitithanpraphas, unveiled the Medium Fiscal Framework (MTFF) plan for 2026-2030, which has received Cabinet approval. This plan aims to enhance fiscal capacity and ensure long-term sustainability through a gradual increase of the VAT rate, currently set at 7%.

According to Thai News Agency, the government’s strategy under the MTFF plan involves raising VAT to 8.5% in 2028, contingent upon the Thai economy achieving full growth. If economic recovery remains insufficient, alternative measures such as boosting revenue from other sources or cutting government expenditures will be considered, as outlined in the MTFF plan. Mr. Ekniti has stated that these measures will replace the planned VAT hike if necessary.

In addition to the VAT adjustments, the Cabinet has directed the Ministry of Finance and the Budget Bureau to devise a plan to reduce government expenditures. This includes eliminating duplicate welfare spending by centralizing disbursements into a single system to minimize waste. Some investment budgets may also be redirected towards other mechanisms like state-owned enterprises, public-private partnerships (PPPs), and infrastructure funds.

The primary objective of the MTFF is to lower the fiscal deficit from 4.4% of GDP to below 3% by 2029. This will be achieved through comprehensive tax reform, spending cuts, an expanded role for infrastructure funds, and improved fiscal discipline. These measures are expected to bolster Thailand’s fiscal stability, contributing to the maintenance of the country’s credit rating by S and P.