Finance Ministry to maintain VAT at 7 per cent

BANGKOK, May 20 (TNA) -- Finance Minister Apisak Tantivorawong said his ministry will ask the cabinet to maintain value-added tax or VAT at 7 per cent for another year despite a proposal by the National Legislative Assembly (NLA) to the government to increase value-added tax (VAT) collection to 8. Legally, the VAT was subject to a rate of 10 per cent, but the current VAT exemption has kept it at 7 per cent. The law temporarily reducing VAT collection at the current rate of 7 per cent expires on September 30. Finance permanent secretary for Finance Somchai Sajjapong said that the NLA has proposed the government to raise VAT collection to 8 per cent which would enable the government revenue to increase between 60 – 70 billion baht annually. The increase, if approved, would impact people while the country’s economy is recovering after the gross domestic product during the first quarter expanded 3.3 per cent, said Mr Somchai, adding that the Finance Ministry will soon request the cabinet to extend VAT collection at 7 per cent. Deputy Prime Minister Somkid Jatusripitak, who is responsible for national economic affairs, said both the Finance Ministry and the Bank of Thailand are closely monitoring the issue and any increase in VAT now could impact the country’s economy like Japan. Thanawat Polvichai, director of University of the Thai Chamber of Commerce’s Economic and Business Forecasting Centre, said Thailand’s economy would be affected if the government agreed to raise VAT as proposed by NLA. It would be better to raise VAT after the national economy is fully recovered and prices of agricultural products increased, said Mr Thanawat, adding that the country’s economy is still volatile and only certain industrial sectors have recovered presently. (TNA)