Dr. Chatrchai Tuongratanaphan, Executive Director of the TRA, said, "Thailand's current economic situation has only tourism playing a major role in driving the country's economy. The export and agricultural sectors as well as domestic consumption have stayed flat. Our plan aims to strengthen Thailand's appeal to tourists as a shopping destination so that we not only attract them to visit but also get them to leave more money behind in our country. The proposal includes two important measures:
1. The first is a Value Added Tax (VAT) measure, with either a VAT refund for foreign tourists immediately at the point at which they make a purchase, at stores, or imposing 'zero percent' value added tax on sales made to foreign tourists on condition of a minimum purchase amount;
2. And, second, is the promotion of more downtown duty-free shops which are popular with foreign tourists and encourage higher spending. For more downtown duty-free shops to open in Thailand, all the government needs to do is to support the creation of pick-up counters at international airports which are operated by neutral corporate entities and offered on equal terms to all retailers."
"It is important to increase the number of foreign visitors arriving in Thailand. But it is even more important and of greater benefit to more Thais across many more sectors if we can get foreign visitors to want to spend more in Thailand than they are currently spending," said Dr. Chatrchai.
"Both of the measures have already been adopted in some countries in Asia. Japan announced a policy to triple the number of tax-free stores in Japan to 20,000 within 2020 and to free foreign visitors of these taxes. Japan is well known for its strict fiscal discipline and it is still adopting these measures. They are nothing new or extraordinary. Thailand can and should do the same. As for the duty-free store measure, China has put a lot of focus on it and has built the world's largest duty-free mall, in Hainan, to attract Chinese and foreign shoppers. These types of developments may also have some adverse effect on Thailand's attractiveness as a shopping destination for international tourists," Dr. Chatrchai said.
Dr. Chatrchai added that "over the past three years, more than Bht 200 billion has been invested in Thailand's retail sector in building great new shopping destinations that create excitement and encourage foreign visitors to enjoy new shopping experiences. The TRA believes that the government must adopt measures to boost tourist spending in Thailand if our retail sector is going to stay competitive regionally and for Thailand to achieve its goal of being the AEC's shopping hub, and thereby bring prosperity to millions across many different sectors. Freeing foreign visitors from VAT burdens and increasing the number of downtown duty-free shops, is a great place to start easily and quickly."
"In 2014, Thailand generated Bht 1.2 trillion from international visitors. We believe that if the government adopts both of our proposed measures, spending by foreign tourists will double in 3 years' time," Dr. Chatrchai said.
Mrs. Rawittha Pongnuchit, a tax law expert and former Deputy Director-General of the Revenue Department, said, "Both measures of the TRA are certainly doable and will ultimately contribute to an increase in the country's national income. They will help Thai people boost their incomes and the government will be able to generate more revenues from all types of direct and indirect taxation."
She said, "These measures will not only boost retail spending but also have an immediate positive effect on many other sectors that benefit from tourism and its trickle-down effects, including hotels, spas, restaurants, land and air transportation, and a host of other sectors.
"The tourism industry offers direct and indirect employment for over 5.7 million people, which is a very high number that is almost equal to the number of jobs in the country's entire manufacturing sector. Boosting this sector boosts the livelihood of a lot of people."
According to Mrs. Rawittha, "The value added tax measures can readily be adopted by the government. The Ministry of Finance must first assign the Fiscal Policy Office to conduct a feasibility study. Then the Revenue Department will review the criteria, methods and conditions under the Revenue Code to ensure they can be correctly implemented.
"However, the downtown duty-free store measure can be done immediately. The duty-free shops must meet the criteria and get approval from the Customs Department. All the government needs to do is to support the establishment of pick-up counters at departure terminals of international airports so that it is convenient for foreign tourists who make purchases at downtown duty-free shops to pick up their purchases before leaving the country. This way, airports also get to generate revenue from pick-up counters. It's good for every party," said Mrs. Rawittha.
"While the value added tax measure will have to wait for the Finance Ministry's feasibility analysis, the measure to increase downtown duty-free shops is a real, doable alternative for foreign shoppers. The key is for the government to support the establishment of pick-up counters at all international airports that are neutral corporate entities which all downtown duty-free shops can use on equal terms. This way, overall revenues to the country will immediately increase," Mrs. Rawittha said.