Thai retailers call for more duty-free shops to attract tourists

Thai retailers call for more duty-free shops to attract tourists

The government should continue endorsing tax breaks for consumers and open more duty-free shops to attract foreign tourists and boost the retail business, according to the Thai Retailers Association (TRA).

"The tax measure endorsed for the last seven days of last year has helped the whole retail sector to grow by 3.1 per cent in 2015, up from 2.8 per cent in an earlier forecast.

"It would be great if the government could extend this scheme to cover foreign tourists in order to encourage more spending while they stay in the country," Jariya Chirathivat, president of the TRA, said yesterday.

For domestic tourism, the government should continue the tax-deduction measure and implement it twice annually, in the first and second halves of the year. This would increase spending by local people, particularly for tourism, during the low and back-to-school seasons.

The government should allow more operators to open duty-free shops in major towns and tourist destinations. It is hoped this would reduce the prices of luxury products and other goods, and encourage tourists to spend more.

"The government should give the green light to more operators to run duty-free shops at major airports and in downtown areas. Currently, there is only one duty-free operator in Thailand.

"The government should support this by having pick-up counters at major airports for tourists buying duty-free products in downtown shops. This would benefit the tourism industry," Jariya said.

The average daily spending per visitor is about Bt5,000 (S$197), he said. Nearly one-third of that, or about Bt1,400, is for shopping. However, the average tourist shopping expenditure in Thailand is half that in Singapore and a quarter of the outlay in Hong Kong.

"The problem is tourists don't come to Thailand mainly for shopping, because most luxury goods here are more expensive than in Singapore or Hong Kong," she said.

To strengthen the retail business in 2016, the TRA has offered more proposals to the government for consideration, including speeding up investment in infrastructure projects to create jobs and increase incomes.

Other ideas are imposing some measures to boost local consumption by focusing on middle-to-high-income earners, restoring shoppers' confidence, and putting consumers in a shopping mood by running some campaigns during the low season.

Reducing duties on luxury brand-name imports to attract more shopping from foreign tourists is also needed. According to the Global Blue survey for 2012-13, Thais were ranked sixth in claiming tax refunds on overseas shopping.

The TRA said the 2015 special tax break was one of the government's New Year gifts for Thais. All retailers and product makers are registered in the value-added-tax system.

The measure, which offered tax deductions of up to Bt15,000, augmented consumer purchasing power. Earlier, the government imposed another measure to allow deductions of up to Bt15,000 for individual taxpayers who bought hotel accommodations and other services from tourism operators.

Both tax breaks will together allow individual taxpayers to deduct up to Bt30,000 on their personal income tax.

It was predicted that the shopping spree during the New Year celebrations rose 20 per cent or Bt25 billion and pumped Bt125 billion into the economy in the final month of 2015.

According to the World Bank, Thailand's tax collections should reach 21.35 per cent of gross domestic product, but only 16.02 per cent has been collected over the last few years.

A study of the tax structure found only 327,127 companies and partnerships registered with the corporate-income-tax system, or only 12 per cent of the 2.7 million entities registered with the Commerce Ministry's Business Development Department.

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