Thailand’s Senate committee on economic and fiscal affairs has proposed a comprehensive tax reform package, including a hike in value-added tax (VAT), aimed at addressing the country’s rising public debt. The Economic, Monetary and Fiscal Affairs Committee, chaired by Senator Kamphon Suppahaeng, completed its study and is scheduled to submit the report to the full Senate for approval before it is forwarded to the cabinet.

The report highlights persistent fiscal deficits averaging around 4% of gross domestic product (GDP) over the past decade, exceeding the 3% limit set by the government’s fiscal sustainability framework. This ongoing shortfall has contributed to increasing public debt levels, which the committee warns could approach or surpass the legal ceiling between 2027 and 2029. Such a trend would likely compel the government to expand borrowing to cover budget gaps, prompting the need for substantial tax system reforms.

Among the key recommendations is raising the standard VAT rate from the current 7% to 10%, with the additional revenue intended to support social welfare programs and address challenges related to an aging population. The committee also proposes modernizing tax administration through the adoption of advanced technologies including artificial intelligence, as well as transforming the Revenue Department into an independent national tax authority governed by its own board to minimize political interference.

The report suggests implementing a unified registration system for all taxpayers linked to welfare, public payroll, and social security databases, enhancing compliance and administration. It also recommends various tax measures aimed at different sectors and income groups: increasing child tax deductions to 500,000 baht per child; introducing tax-deductible savings accounts for families; requiring e-commerce platforms to withhold 2% income tax at the source; and taxing dividend income over 10 million baht at progressive rates. Startups would receive tax exemptions during their first three years to encourage innovation.

The committee targets foreign digital companies such as TikTok, eBay, and Alibaba by proposing a 20% corporate tax on income earned within Thailand, regardless of physical presence. On consumption and trading, the plan includes mandatory electronic invoicing, a “receipt lottery” initiative to boost tax compliance, removal of VAT exemption thresholds for small businesses, and new taxes on stock trading and gold transactions.

Additional proposals focus on local revenue generation and asset management, including higher levies on idle land, revised billboard taxes, and stricter inheritance tax enforcement requiring payment within 150 days of death. The report also explores the possibility of implementing a “Home Town Tax” system to empower local governments with independent revenue-raising authority.

The Senate committee’s proposals are expected to prompt considerable discussion regarding their potential effects on consumers and businesses, balancing fiscal sustainability with economic growth and social equity objectives.