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New Domestic Tourism Tax Breaks Approved

Bangkok, Thu Dec 01 2016
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The cabinet gave the nod Tuesday to the reinstatement of tourism stimulus measures including a 15,000 Baht tax break on domestic tour packages and hotel accommodation for individual taxpayers. The measures are intended to entice people to spend the long public holiday at home rather than travelling abroad. They also aim to spark a year-end spending spree as the economy sags and offset the impact of the government's crackdown on “zero-dollar” tour operators and the subsequent drop in Chinese tourists.

Authorities launched a campaign to tackle zero-dollar tour scams in late September because of complaints that the tours were tarnishing Thailand's reputation. The tour scams involve offering cheap package tours to customers who are then pressured into buying goods and services at inflated prices so operators can recoup their losses. But the clampdown has resulted in a slowdown in tourist arrivals and economic losses, with some critics arguing that such an approach was not the best option to address the problem. The government estimates that the zero-dollar crackdown lowered the number of Chinese visitors by as much as 1 million. Nathaporn Chatusripitak, an adviser to Commerce Minister Apiradi Tantraporn, said the measures are also intended to encourage tour and hotel operators to register as the law requires. The tourism stimulus scheme will run from Dec 1 to Dec 31 and is expected to result in a multiplier effect worth 1 billion baht to the Thai economy, he said.

In April this year, the cabinet approved a renewal of stimulus measures for the tourism industry that included a 15,000 Baht tax break on domestic tour packages and hotel accommodation for individual taxpayers, as well as for businesses and private individuals who provide training programmes for employees. The scheme, which expired last December, runs until the end of this year and became effective retroactive from the 1st January. As a result, those yet to travel this year are eligible to enjoy up to 30,000 baht in deductions from taxable income spent on tour packages and hotel accommodations in 2016, Mr Nathaporn said. He said Chinese visitors to Thailand are estimated to reach 9 million this year, down from 10 million in the previous forecast, while total foreign arrivals are estimated at 33 million.

The National Economic and Social Development Board, the government's planning unit, recently forecast the number of foreign visitors to rise by 8% next year to 35.6 million. The tourism industry is expected to generate 1.95 trillion baht in income next year, up roughly 10% from 1.76 trillion baht in 2016. Thanavath Phonvichai, vice president for research at the University of the Thai Chamber of Commerce, said the tourism stimulus measures are expected to benefit about 4 million individuals but not all of them will be eligible to enjoy the full benefit of the tax breaks, as some have already exercised the rights, he said. “We estimate this scheme will help generate about 10 billion baht worth of spending, comprising 0.03-0.05% of GDP” Mr Thanavath said.

In a related development, Kobsak Phutrakul, assistant minister to the Prime Minister's Office, said the cabinet has yet to approve the planned tax incentives for the holiday season to compliment extra discounts at shopping malls nationwide. The Finance Ministry said Monday that it would seek cabinet approval for the tax breaks, which are more aggressive this year, doubling the cap on claimed value to 30,000 baht per shopper. The period will also be lengthened from last year's seven days.

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