Finance Ministry warns 2025 revenue shortfall amid weak economy, auto tax slump
A senior Finance Ministry source revealed that government revenue collection for the 2025 fiscal year is likely to fall short of the 2.88 trillion baht target set in the budget documents by tens of billions of baht.
The shortfall is primarily driven by slower economic growth, with the Fiscal Policy Office (FPO) projecting GDP expansion of just 2.2% for the year.
Several key tax categories have underperformed expectations. Most notably, automobile tax revenue has been hit by the government’s electric vehicle (EV) promotion scheme, which reduced the number of combustion engine cars paying tax.
Value-added tax (VAT) from imports and corporate income tax collections also face challenges, as businesses increasingly use bonded warehouse privileges and corporate earnings fall short of potential amid the sluggish economy.
Ten-month revenue collections still fall short of target
Government revenue collection during the first ten months of fiscal year 2025 (October 2024 – July 2025) totalled 2.25 trillion baht. This was 1.8% or 40.8 billion baht higher than in the same period last year, yet still 37.6 billion baht, or 1.6%, below the target.
An assessment of the three key tax departments showed that each collected less than its target:
- Revenue Department – 1.82 trillion baht, 11.9 billion baht (0.6%) below target.
- Excise Department – 446.7 billion baht, 56.3 billion baht (11.2%) below target.
- Customs Department – 95.3 billion baht, 6.3 billion baht (6.2%) below target.
State enterprises and other government agencies
On the positive side, state enterprises outperformed expectations, remitting 157 billion baht, which was 17 billion baht (12.2%) above target. Other government agencies also did better than forecast, collecting 151.2 billion baht, exceeding the target by 17.4 billion baht (13%). These contributions helped cushion the overall shortfall.
A senior ministry source expressed confidence that, despite the revenue gap, the Finance Ministry has measures in place to ensure the budget will be closed by September 30, 2025.
The government plans to rely on fiscal tools and sufficient liquidity from the existing treasury balance, avoiding the need for additional borrowing. Currently, the treasury holds 405 billion baht.
Tax reform pushed as long-term fix for revenue shortfalls
The challenges in revenue collection have reignited debate on the need for tax reform as a long-term solution. The FPO has previously promoted such measures to strengthen fiscal stability and improve fairness in the system.
An FPO report noted that Thailand’s VAT rate of 7% remains below the average for emerging economies that are not energy exporters. At the same time, VAT collection efficiency relative to domestic consumption has steadily declined — from 4.6% in 2015 to just 4.0% in 2024. This reflects tax base leakages outside the formal system and the rapid growth of online trade.
As a result, raising the VAT rate has emerged as a proposal under consideration. It is estimated that each 1% increase in VAT could generate an additional 70 billion baht in state revenue, which could be used to support vulnerable groups and finance essential infrastructure investment.
Personal income tax presents another major challenge. Thailand’s collection remains 0.5% of GDP below the average for peer economies. According to FPO data, only 10% of those filing returns are liable for tax, while a further 17% file but pay nothing.
More concerning still, as much as 73% of working-age Thais with income do not file returns at all, remaining outside the tax system.
