Thai Government to Close Airport Duty-Free Shops to Push Domestic Spending
According to an announcement made by the Thai government, all duty-free shops are soon to be closed in international-arrivals airports to give way to more local spending. It said that available estimates would add an estimated about 3.5 billion baht in new retail spending every year domestically.
All three operators of inbound duty-free businesses agreed to halt their operations in eight international air ports, under the government policy to encourage retail spending within the country, according to Rudklao Intawong Suwankiri, a deputy government spokesperson. There was no clear statement as to the period of suspension.
Rudklao noted that the ministers agreed upon the guidelines, initiating Thailand as a hub in tourism and consumption, put forward by his Ministry of Finance. Among them would be the removal of tax privileges of the bonded warehouses that serve the inbound duty-free shops. The ministry will keep a close tab on the progress of the changes.
Three firms are licensed to operate the bonded warehouses for duty-free shops in the arrival areas of eight international airports: Suvarnabhumi, Don Mueang, Chiang Mai, Phuket, Hat Yai, U-tapao, Samui, and Krabi. The sales from inbound tax-free shops reached 3.02 billion baht in 2023, according to statistics from the Customs Department. The duty-free operators have agreed to cease all operations of inbound duty-free shops until the probable revocation of the government policy.
Currently, tourists visiting Thailand are entitled to purchase goods with tax exemption under some conditions: the items should not have a value higher than 20,000 Baht, and specific limits on the purchasing of cigarettes, cigars, tobacco, and alcoholic beverages exist- up to 200 cigarettes; up to 250 g each of cigars or tobacco, or a combined total not exceeding 250 g; and alcoholic beverages up to 1 L. Rudklao mentioned that this move will reduce the chances of spending on local products. The Ministry of Finance will consider the appropriateness of revoking permits for bonded warehouses serving inbound duty-free shops, along with the exemption of taxes on articles purchased from these shops by arriving passengers.
This would encourage local consumption and the use of local products, which is aimed at boosting the general economic value. The ministry thinks that closing the inbound duty-free shops will increase foreign tourist spending in the country by 570 baht per person per trip.
This would have the direct impact of making the duty-free operators, which has already caused them to stop their operations for one year, generate new cash flow of up to 3.46 billion baht per annum that would be circulated in the retail sector, tourism industry, as well as general stores. Business opportunities will be enhanced with this change in effect and, simultaneously, influence production and investment, hence increasing employment and, overall, government tax revenues, indicated Mrs. Rudklao.
