Govt. signals VAT hike to 8.5% in 2028 and full 10% in 2030, with higher fuel excise from 2027
Thailand plans a phased VAT increase to 8.5% in 2028 and 10% in 2030, alongside higher fuel excise in 2027, as part of a broader fiscal overhaul to curb the deficit
- The government plans a gradual VAT increase—raising the rate to 8.5% in 2028 and to the full 10% in 2030.
- Fuel excise taxes on both petrol and diesel are set to rise by 1 baht per litre starting 2027.
- The adjustments form part of a wider fiscal restructuring aimed at strengthening budget stability and reducing the deficit.
Thailand is moving ahead with a major fiscal restructuring to reinforce medium-term financial stability, focusing on improving revenue efficiency and gradually raising the Value Added Tax (VAT).
The objective is to bring the fiscal deficit down to no more than 3% of GDP by FY 2029, in line with the Medium-Term Fiscal Framework (MTFF) for FY 2027–2030.
A source at the Ministry of Finance told that one key measure is the planned increase in VAT.
The government intends to raise the current rate of 7% to 8.5% in 2028, followed by a further 1.5-percentage-point increase in 2030, bringing the rate to the standard 10%.
The source emphasised that mitigation measures will be introduced to ease the impact on households and the broader economy, ensuring a smooth transition.
Beyond VAT, the fiscal plan identifies several additional revenue measures, including restructuring the personal income tax system and reviewing certain deductions for appropriateness.
At the same time, the government aims to increase revenue from fuel taxation, targeting a 1-baht-per-litre rise in petrol and diesel excise by 2027.
Other revenue measures include collecting import duties on low-value goods (under 1,500 baht) and increasing dividend remittances from certain state-owned enterprises by 5%.
Technology and big data will play a larger role in tax expansion.
The government plans to integrate income and taxpayer information across agencies through a Data Lake system to improve enforcement and compliance, including heightened scrutiny of individuals and businesses.
Additional revenue will also be sourced from state assets—such as state land—and from improved management of other government property.
The fiscal restructuring plan was approved by the Cabinet on November 18, 2025, with instructions for the State Fiscal and Financial Policy Committee, the Budget Bureau, and the Ministry of Finance to refine implementation details.
The measures are intended to support the government’s Quick Big Win framework, which calls for stricter fiscal discipline—limiting the central budget to no more than 3% of total expenditure, ensuring debt-servicing allocations of at least 4%, and capping multi-year commitments at no more than 5%.
Despite tighter central spending, the government will continue advancing key investments through alternative mechanisms that do not add to public debt—such as the Thailand Future Fund (TFFIF) and public-private partnership (PPP) schemes.
The government maintains the target of raising total revenue to 15.1% of GDP, up from the current 14.8%, while reducing government spending from roughly 19% of GDP to around 18%, in order to strengthen fiscal resilience amid global economic uncertainty.
