The Finance Ministry is preparing a timeline for its tax reform plan, covering both tax increases and reductions.
According to finance permanent secretary Lavaron Sangsnit, once the government’s “Quick Big Win” initiatives are completed, the tax reform working group will begin on improving government revenue.
He said the group will prepare a detailed timeline for each area of the tax reform plan, indicating when each measure should be introduced.
According to Mr Lavaron, a key reform measure is the revision of personal income tax deductions, in line with the policy direction of Finance Minister Ekniti Nitithanprapas.
Numerous personal income tax deductions are offered by the Revenue Department, which when combined can exceed 1 million baht per taxpayer. The large number of tax deductions is one factor causing the department to collect less personal income tax than expected, he said.
“Revising tax deductions will allow us to collect taxes more fully and efficiently, but there is a trade-off as deductions are often used to promote certain activities by providing incentives,” said Mr Lavaron.
Regarding the government’s revenue collection for fiscal 2025, which ended on Sept 30, he said it fell short of the target, but by less than expected. Mr Lavaron originally anticipated a shortfall of around 100 billion baht, but preliminary results suggest the shortfall is significantly smaller.
Part of the improvement is due to the recent discontinuation of the fuel excise tax reduction, which restored nearly 6 baht per litre in excise revenue to the state.
“Revenue-related departments worked hard until the very last day of the fiscal year. Our goal was to minimise the shortfall as much as possible,” he said.
For fiscal 2026, which started on Oct 1, the government set a revenue collection target of 2.92 trillion baht, up 1.2% year-on-year.
During the first 11 months of fiscal 2025 (October to August), the government collected a net revenue of 2.50 trillion baht, an increase of 46.8 billion baht or 1.9% year-on-year, though it was 34 billion baht or 1.3% below the target.
The shortfall was attributed to weaker automobile excise tax collection, as more people switched to electric vehicles, which have lower tax rates than internal combustion engine cars, as well as lower than targeted value-added tax (VAT) collection for imported goods.
All three main tax collection agencies fell short of their targets during the first 11 months of fiscal 2025. The Revenue Department collected 2.01 trillion baht, down 1.3% from its target, while the Excise Department amassed 489 billion, 11.8% less than its target, and the Customs Department collected 104 billion, a dip of 7.1% from its goal.
In the past, the Fiscal Policy Office (FPO) has promoted a tax reform plan to increase government revenue and enhance fairness in the tax system. Thailand’s 7% VAT rate remains below the average of non-resource-rich and non-fuel-exporting emerging markets (Non-RRFEEMs) by 2.9% of GDP.
In addition, domestic VAT revenue (before refunds) as a share of consumption is declining, partly due to leakage in the informal tax base and the rapid growth of online platform transactions. In 2024, VAT revenue as a percentage of consumption was 4%, down from 4.6% in 2015.
This outlook has led to several proposals to raise the VAT rate, with the FPO noting an increase of one percentage point could generate an additional 70 billion baht in government revenue, which could be used to support vulnerable groups in society and invest in infrastructure development.
Thailand’s personal income tax collection remains 0.5% of GDP below the average for Non-RRFEEMs, according to the FPO. Only 10% of the population filing personal income tax returns are liable to pay taxes, while 17% file but have no tax obligations after deductions and allowances, while 73% of working age Thais with income do not file.