The Ministry of Finance is preparing to undertake a comprehensive tax reform initiative during fiscal year 2025, aimed at significantly increasing government revenue, improving fiscal discipline, and promoting socioeconomic equity. The main reform agenda regarding direct and indirect taxation has been prioritized by the government amid persistent budget deficits and external economic uncertainties.
It is emphasized for urgency of enhancing fiscal resilience, noting that increasing tax revenue is essential for the country to begin working toward a balanced budget for the first time in over two decades.
Currently, Thailand’s tax-to-GDP ratio stands at 15.5%, which is less than averages of approximately 17%, and far below the target of 18%. By achieving this goal, Thailand is expected to generate an additional 800 billion Baht annually, substantially reducing the budget deficit and enabling more robust funding of public services.
The key objectives of the proposed tax reform shall be follows:
1. Revenue expansion across core tax departments
The reform strategy includes sweeping changes to the Revenue Department, the Excise Department, and the Customs Department, the three primary tax authorities. The Ministry of Finance has instructed these tax authorities to identify new sources of revenue and improve enforcement to curb tax evasion and inefficiencies under the following plans:
- The Excise Department is adjusting its oil tax regime, with a recent increase of 1 THB per litre, which is expected to raise approximately 15 billion THB over the remaining months of FY2025.
- The Revenue Department is focusing on addressing VAT evasion schemes, notably by businesses that artificially split operations to remain under the 1.8 million THB threshold for exemption from full VAT liability.
- The Customs Department is being tasked with improving collections and addressing loopholes, especially in light of a 6.9% shortfall in revenue during the first half of FY2025.
2. Addressing inequality through progressive taxation
A significant component of the tax reform focuses on reducing economic inequality through more progressive property and inheritance taxation under the concept of “those with greater wealth have a higher ability to pay” to achieve a fairer tax system.
3. Strategic reform objectives
The tax reform framework shall be based on 4 strategic pillars which are:
- Enhancing competitiveness and sustainable growth
- Supporting the digital economy
- Promoting the green economy
- Establishing a fair, transparent, and accountable tax system
4. Adapting to the new economy
Thailand is also facing challenges in aligning its tax code with the realities of the digital and platform-based economy, including issues related to:
- Cryptocurrencies
- Digital services and platforms
- New wealth tax proposals
This tax reform marks a critical turning point in its fiscal policy, combining immediate revenue generation measures with longer-term structural adjustments. If the reform is successfully implemented, it could strengthen public finances, reduce inequality, and modernize the tax system to align with the demands of a digital, globalized economy.
Thailand moves toward tax comprehensive reform_Bangkok Global Law