VAT effectively kept at 7% level

The National Council for Peace and Order issued an order last night which effectively results in the 7% Value Added Tax being maintained for another fiscal year until Sept 30 next year.

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.

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