Thailand's 7% VAT Extended to September 2026

How Thai VAT actually works — the quick version

Thailand introduced VAT (Value Added Tax) in 1992, and the statutory rate written into the Revenue Code is 10%. In practice, the government has used Royal Decrees to cut that rate to 7%, renewing the reduction every one to two years to support consumption and ease the burden on business. The 7% figure everyone quotes is therefore a temporary rate that has simply never been allowed to lapse.

The 7% that appears on your invoices is made up of two parts:

Component	Rate	Goes to
VAT (reduced by Royal Decree)	6.3%	Central government (Revenue Department)
Local tax	0.7%	Local administrative authorities
Total (the rate charged on the invoice)	7%	—

So when you see "VAT 7%" on an invoice, it is really 6.3% plus 0.7%. At filing and payment time the two portions are reported separately — one to the Revenue Department, one to local government.

The latest extension — the October 2025 Royal Decree

A Cabinet resolution in 2025 extended the reduced rate for another year. The key terms:

Item	Detail
Effective from	1 October 2025
Expires	30 September 2026
Reduced rate	6.3% (7% including local tax)
Statutory rate	10% (unchanged)
If it is not extended again	The rate reverts to 10% automatically from 1 October 2026

Business impact — who needs to prepare

1. VAT-registered businesses

If you are VAT-registered (annual revenue above THB 1.8 million), check that:

• Invoices and receipts state 7% throughout the extension period
• POS, e-commerce and ERP systems calculate VAT at 7%, not 10%
• Contracts and quotations that run past October 2026 spell out the VAT terms, so a rate change does not turn into a dispute

2. Finance and accounting — have a plan for a return to 10%

The rate is 7% today, but the finance team should be ready for the alternative:

• Test that your ERP can change the rate without touching historical data
• Configure a VAT rate effective date — invoices dated before the change keep the old rate, invoices after it take the new one
• Draft the customer and supplier communication templates now, so they are not written under time pressure

3. Contractors and long-running projects

A project signed while the rate is 7% but delivered after 1 October 2026 raises questions that belong in the contract, not in an argument afterwards:

Situation	What the contract needs to settle
Signed in 2025, delivered in 2027	VAT applies at the rate in force on the delivery date — who absorbs the difference?
Payment milestones spanning the change	Milestones before 1 October 2026 use 7%; later ones use the rate at their tax point
Down payment first, delivery later	The tax point of the down payment and of final delivery must be stated explicitly

What your ERP needs to handle

A capable ERP treats VAT as a rate that varies by period, not a hardcoded constant. Here is what to check in your own system:

Capability	Why it matters
Add a new VAT rate at any time	When the law changes, an administrator adds the new rate — no waiting for a vendor patch
Make an old rate inactive	The old rate stays in the system for auditing historical invoices; it is simply marked inactive so new transactions cannot use it
Valid from / valid to on each rate	The system picks the rate that applies on the transaction date — nobody has to switch it by hand
Invoices use the rate at the tax point	Not the rate that happens to be current — this is what keeps you compliant
Audit trail on rate changes	Who changed what, when, and from which value to which — for both internal audit and the Revenue Department
Reporting split by rate	VAT reports must break output VAT down by the rate applied on each invoice
No retroactive recalculation	No automatic retroactive recalculation — historical invoices must remain exactly as issued

Common traps

Why the rate never seems to go back to 10%

It is a fair question: why has the government kept extending the reduction for close to three decades, since the aftermath of the 1997 financial crisis? Three reasons carry most of the weight:

• It is a stimulus lever — VAT is a consumption tax, so a lower rate lifts purchasing power immediately
• The political cost is high — a VAT increase touches every household, which makes it an unattractive move in any year
• Business has built around it — pricing and ERP configurations across the country have assumed 7% for a decade or more

There may well be pressure to restore the 10% rate in future as the government looks for revenue, but for the next year or two, 7% remains the working assumption.

Saeree ERP — flexible VAT handling

The tax module in Saeree ERP is built so a VAT rate change does not disturb existing records:

Capability	How Saeree ERP handles it
Add or deactivate VAT rates yourself	An administrator adds a new rate at any time, or marks an old one inactive without deleting it — it is configuration, not a hardcoded value waiting on a vendor patch
Valid from / valid to per rate	Each rate carries its own active period (for example 7%: 1 Oct 2025 – 30 Sep 2026), and the system selects whichever rate is effective on the transaction date
Multiple rates side by side	VAT 7%, VAT 0% (exports) and VAT-exempt can all coexist and be assigned per product or service
Audit trail	Every rate change is logged and the log cannot be deleted — ready for a Revenue Department inspection
Back-dated invoices	An invoice issued for an earlier date uses the rate in force at its actual tax point, not the current one
e-Tax Invoice	Supports ETDA Standard 3-2560 (2017), so it works with the Revenue Department's e-Tax Invoice system

Related reading: the new TFRS accounting standards taking effect in 2026, a practical guide to e-Tax Invoice in Thailand, PDPA and the accounting function, designing a chart of accounts that survives growth, and finding the real cost in a manufacturing business.

Conclusion — an action list

When	What to do
Now through July 2026	Check that the VAT rate in your ERP has a validity period ending 30 September 2026, and that it is set correctly
August – September 2026	Watch for the government's decision on a further extension, and keep both plans ready
October 2026 onwards	Apply whichever rate the Royal Decree sets — 7% again, or the statutory 10%

The 7% VAT Thailand has lived with for close to three decades is not a permanent setting — it is a policy that has to be renewed every cycle. A good ERP is built for the day the policy changes, not hardcoded to the day it was installed.

— Saeree ERP Team

References

• vatcalc.com — Thailand e-invoicing & VAT reduction Royal Decree
• EDICOM — Electronic invoicing in Thailand
• Pagero — Thailand compliance updates