Pattaya’s beer bars and cafés brace for impact as VAT reform targets underreporting. PATTAYA, Thailand – As Thailand considers reforming its value-added tax (VAT) system, small businesses in Pattaya — particularly beer bars, English breakfast cafés, and other tourism-dependent enterprises — may soon find themselves under greater scrutiny. The Finance Ministry is weighing a proposal to introduce a 1% VAT rate for businesses with annual revenue between 1.5 million and 1.8 million baht, aiming to close long-standing loopholes and boost tax compliance. A significant number of small businesses in Pattaya, especially in the hospitality and nightlife sectors, are believed to routinely underreport their earnings. Underreporting refers to the intentional declaration of less income than actually received, often to stay under the VAT threshold and avoid paying taxes. For instance, a business making 2 million baht a year might only report 1.7 million to avoid VAT registration — an act that is illegal and considered tax evasion. If the proposed reform is implemented, thousands of Pattaya’s small establishments may be forced to either come clean about their earnings or face legal and financial consequences. Some owners fear that even a 1% VAT rate could cut into their already tight margins, particularly as tourism remains inconsistent and operating costs continue to rise. While the goal of the reform is to improve compliance and generate much-needed revenue for the state, local business owners warn that without parallel measures to reduce bureaucratic red tape and support small enterprises, the crackdown could do more harm than good.