According to the order, the junta announced the VAT rate will be cut to 6.3% from Oct 1 to Sept 30 next year. However, the 7% rate currently applied will be maintained because the 6.3% rate will have local tax of 0.7% added.
The municipal tax takes effect in the same period as the 6.3% adjustment.
And from Oct 1 next year, the VAT will increase to 9%, plus local tax of 1%. That will bring the combined rate to 10%, which is the ceiling required by law.
The move effectively maintains the policy of the Yingluck Shinawatra government issued on Aug 2012 to keep the VAT rate at 7% until Sept 30. The previous government wanted to stimulate consumer spending and spur the economy.
VAT was first introduced in 1992 at a rate of 10%, but was immediately slashed to 7% at the request of business operators who felt the rate was too high.