Finance Ministry Plans Measures to Reduce Revenue Shortfall as Economy Slows

Thailand’s Finance Ministry is stepping up measures to prevent a widening revenue gap as the country’s economic growth sharply slows down.

Permanent Secretary Lavaron Sangsnit acknowledged that tax collections are lagging behind expectations, citing downgraded GDP projections of under 2%, compared to the earlier 4.5–5% estimate.

Tax Revenue Fails to Keep Pace With Projections

Slower-than-expected growth has led to lower-than-projected revenue from key departments.

From October 2024 to May 2025, net government revenue stood at 1.704 trillion baht, falling short by 12.75 billion baht or 0.7%. Major tax collection departments together missed their targets by 55.6 billion baht (3.0%).

• Revenue Department: –7.8 billion baht (–0.6%)
   
• Excise Department: –42.0 billion baht (–10.6%)
   
• Customs Department: –5.8 billion baht (–7.1%)

The corporate income tax shortfall is partly attributed to delayed filings by companies using online systems, which extend deadlines into June.

Positive Signs in Year-on-Year Revenue

Despite missing targets, revenue has grown compared to last year.

While revenue fell short of estimates, year-on-year figures indicate growth. Overall receipts increased by 28.8 billion baht, up 1.7% from the previous fiscal period, offering a small cushion for the Ministry’s fiscal management.

Finance Ministry’s Multi-Pronged Response

In light of the shortfall, the Ministry is deploying a range of strategies to reinforce revenue.

1. Maximising Tax Efficiency

Efforts are underway to streamline and enhance revenue collection practices.

The Revenue Department is being directed to intensify tax enforcement and ensure greater compliance, aiming to meet annual targets despite the challenging economic backdrop.

2. Leveraging State-Owned Enterprise (SOE) Profits

Profits from public enterprises will be tapped to help bridge the revenue gap.

The Ministry expects around 100 billion baht in revenue from SOEs. While this will contribute meaningfully, it’s unlikely to fully offset the tax revenue gap.

3. Riding on Market Tailwinds

Certain external and market trends are expected to offer a limited boost.

Rising global oil prices and stronger sales in the auto sector, particularly traditional vehicles may increase tax revenues. However, the growing popularity of electric vehicles (EVs), which benefit from lower tax rates, could temper those gains.

Fiscal Position Reflects Revenue-Spending Imbalance

The government’s fiscal performance shows a widening gap between income and expenditure.

From October to May, the government collected 1.642 trillion baht in revenue but spent 2.593 trillion baht, leaving a substantial shortfall. To maintain operations, it borrowed 777.1 billion baht during this period. As of May-end, treasury reserves stood at 338.5 billion baht.

Treasury Reserves Offer a Safety Net

Despite the revenue miss, the Ministry remains confident about fiscal continuity.

Lavaron reassured that Thailand can dip into its reserves within legal limits to fund essential operations, avoiding additional borrowing if necessary. “We can manage without breaching fiscal discipline,” he said.

Corporate Filings in August Could Be a Turning Point

Upcoming tax collections may help the Ministry close some of the fiscal gap.

A significant portion of corporate tax revenue is expected in August, when more businesses are due to file returns. This inflow could help improve the fiscal picture before the end of the financial year.

Economic Realities Demand Cautious Optimism

The Finance Ministry’s approach reflects the broader economic slowdown and subdued business sentiment.

Lavaron summed up the sentiment aptly: “The economy isn’t doing well, we can all feel it.” Still, the Ministry remains focused on ensuring fiscal stability while pushing for efficiency in collections.

Looking Ahead: Fiscal 2025 Revenue Target

The government remains committed to achieving its 2.88 trillion baht revenue goal.

While the full-year revenue outlook remains under pressure, the Ministry will monitor trends closely and adjust its strategy to avoid breaching fiscal targets as it navigates the remainder of FY2025.
 

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