Every receipt in Thailand shows 7% VAT. The Revenue Code, which is the law that creates the tax, says the rate is 10% — and it has said so since the tax began.
The gap between those two numbers is a royal decree that expires. One is in force until the end of this month; another takes over on 1 October and runs to 30 September 2027. The 7% has been kept alive this way, one instrument at a time, for most of the tax's life.
What the Code says
Section 80 of the Revenue Code sets the rate for sales of goods, services and imports at "10.00%", and then allows it to be moved:
"the rate under paragraph 1 may be reduced by Royal Decree but the rate for each sale of goods, provision of services or importation shall be the same rate."
The figure 7 appears nowhere on that page of the Code. Every Thai receipt for thirty-odd years has been printed under a temporary instrument rather than under the statute.
How 6.3 becomes 7
The decree does not say "7%". It reduces the VAT rate to 6.3%, and a separate allocation sends one-ninth of the tax collected to local government. Six point three plus a ninth of six point three is seven, exactly.
That fraction is worth getting right, because it is widely rendered as "a local tax of 10% on top of the VAT". Ten percent of 6.3 would be 6.93. The local share is one-ninth of what the Revenue Department collects, which is the same thing as one-tenth of what the customer hands over — the two descriptions differ only in what you take the percentage of, and only one of them gives 7.
The decree currently keeping it there
Royal Decree No. 799 covers 1 October 2025 to 30 September 2026, so it is the instrument in force as this is written. Royal Decree No. 807 was gazetted on 23 August 2026 and carries the reduction through to 30 September 2027.
There is a quirk in how these are drafted. Since a 2017 decree, each extension has worked by moving the end date of that original window rather than opening a new one, so the current text still reads as running from 1 October 2017. It is one continuous instrument being rolled forward, which is why the expiry framing is the accurate one: nothing renews automatically, and a lapse would return the rate to the statutory 10%.
Where the "since the 1997 crisis" story goes wrong
The usual telling is that Thailand cut VAT to 7% during the Asian financial crisis and never put it back. The sequence runs the other way.
VAT arrived in Thailand in 1992 at an effective 7%. The crisis is what pushed it up: from 1997 the full statutory 10% applied, under the fiscal programme of those years. The cut back to 7% came in 1999, and that decree established the 6.3-plus-local-share structure still in use. Counting from there, the reduction has been re-enacted about twenty-one times across roughly twenty-three decrees in the tax's history — and not all of them ran a single year, since at least one covered a full two.
What the Revenue Department's own page tells a visitor
Very little of this. The English-language VAT overview states the registration threshold — an annual turnover above 1.8 million baht — and then says simply: "Currently, the rate is 7 percent." Section 80 is not mentioned on it, and neither is any royal decree.
A business planning around Thai VAT from that page alone would have no reason to suspect the rate has an expiry date attached.
Zero-rated and exempt are different things
Exports, international transport, and supplies to the UN and to embassies are zero-rated, which means they are taxable supplies charged at nothing — so input tax stays recoverable. Exemption is a different status: small operators under the 1.8 million baht threshold, unprocessed agricultural produce, newspapers and textbooks, transport, healthcare and education sit outside the charge altogether, and input tax on their costs cannot be reclaimed.
The practical consequence of choosing the wrong label is a cash one, and it falls on the seller rather than the customer.
The parts that reach foreign businesses
Since 1 September 2021, non-resident providers of electronic services earning more than 1.8 million baht a year from non-registered customers in Thailand must register, file and pay VAT there. The Revenue Department's guidance is explicit that they pay on output tax with no input deduction and issue no tax invoice, and that registering does not create a permanent establishment. Business customers who are themselves registered handle it by reverse charge instead.
Imported parcels are a separate story and a moving one. From July 2024 the customs duty-free threshold was cut to one baht, which had the effect of bringing 7% VAT onto low-value consignments that had previously escaped it, and further changes to import duty on low-value goods were announced for 2026. Anyone quoting a threshold here should check its date first.
What to do with it
For pricing or contracts that run past September 2027, the 7% is an assumption rather than a fact, and the sentence to look for is the expiry date of the decree in force rather than the rate itself. Thai accountants track the decree number for exactly this reason.
Anyone comparing regional rates should note what the comparison is really between: Singapore's 9% and the Philippines' 12% are statutory rates, while Thailand's 7% is a discount on a 10% statute. Reading it as a permanently low rate misreads how it is held there.
Where this comes from
Section 80 and the 2.5% and zero-rate provisions were read on the Revenue Department's English site; the 6.3% reduction and the one-ninth local allocation from the department's own Thai-language pages for Royal Decrees No. 646 and No. 507; the registration threshold, zero-rating and exemption lists from its VAT overview; and the electronic-services rules from its published guide of May 2022. All were read on 18 September 2026.
The existence and dates of Royal Decree No. 807 come from Thai national media reporting the Gazette, because the Royal Gazette site itself could not be reached, and the count of decrees over the tax's history comes from a Thai newspaper's tally rather than from the department. Those two figures are the softest in this piece and are the ones to re-check before relying on them.
