On 20 September 2024, the Thai Official Gazette published the Royal Decree (No. 790) 2024 regarding the extension of the reduced Value Added Tax (“VAT”) rate to 7% (including local tax) for one more additional year.
Under Thai tax law, VAT rate applies to the sale of goods, the provision of services, and importation of goods. The standard VAT rate is 10%. However, the reduced 7% VAT rate was initially implemented by Royal Decree (No. 363) 1997, which temporarily reduced the VAT rate from 10% to 7%. Subsequently, the Thai government continuously issued several successive royal decrees to extend the reduced VAT rate, as part of measures to promote economic stability and growth. Currently, the reduced VAT rate is prescribed under the Royal Decree (No. 780) dated 16 September 2023. The extension period will be effective from 1 October 2024 to 30 September 2025.
The reason behind the extension is that the Ministry of Finance recognizes the importance of economic stability in the country. Therefore, the government proposed a draft royal decree concerning the reduction of VAT rate to extend the reduced VAT rate of 7% for another year to maintain the level of domestic consumption growth by not increasing burden on VAT for household sectors.