VAT rate to be pegged at 7 percent for another year

The Revenue Department has proposed the Finance Ministry to keep the value-added tax (VAT) rate at 7 percent for another year until the end of September next year, citing the slow economic recovery and impacts on business operators and the public if VAT is adjusted up.

Revenue Department chief Prasong Poonthaneat said Monday that the government, in the past year, has meted out various packages to help grassroot people who have been hard hit by drought while exports are contracting due to global economic slowdown.

Increasing VAT rate from 7 to 10 percent will add more burden on the consumers and increase the production costs of business operators, he noted.

Mr Prasong pointed out that increasing VAT rate by just one percent will raise VAT revenue to 100 billion baht from 7 billion baht annually.
As for the collection of revenue taxes for 2016 fiscal year, he predicted that the collection would fall short of the adjusted target of 1.75 trillion baht by 140 billion baht due to substantial drop, about 100 billion baht, in petroleum taxes because of low oil prices.

However, he said the department would be able to meet next fiscal year’s target of 1.82 trillion baht in revenue tax collection in light of the forecast of economic expansion next year.