VAT refund on up to B20,000 in store
New perk in the first half of February aims to spur consumption
The Finance Ministry plans to offer a value-added tax (VAT) refund to shoppers who spend up to 20,000 baht from Feb 1 to 15 next year in a bid to boost domestic spending amid murky economic prospects.
With a 20,000-baht maximum and a 5% VAT refund, shoppers will be eligible for 1,000 baht back, said Finance Minister Apisak Tantivorawong.
Only spending on debit cards with savings accounts linked to PromptPay will qualify for the VAT refund.
The shopping tax break is expected to cost the government 6-7 billion baht in forgone revenue, Mr Apisak said.
The VAT refund period coincides with Chinese New Year, which falls on Feb 5, 2019.
Thailand has a 7% VAT on domestic purchases of goods and services.
The Finance Ministry's latest tax break idea comes amid criticism that the government's recent 86.9-billion-baht splurge on low-income earners, the elderly and retirees represents pork-barrel policymaking as next year's general election approaches.
Critics have said the cash handout packages will give the pro-government camp an advantage over other political parties in the general election.
Mr Apisak said he hopes the VAT refund scheme prompts a spending spree and helps maintain the country's economic growth at 4% or above next year.
In the event that the economy expands by less than 4%, an enormous effort would be required to raise the figure to 4%, he said.
Refund claimants are required to spend at shops that have electronic data capture connected to point-of-sale terminals to enable their spending information to be directed to the Revenue Department.
The VAT will be refunded through PromptPay, the government's online money transfer system, by March 15.
Financial institutions have requested a fee waiver to add debit features to ATM cards to facilitate the measure, Mr Apisak said.
Unlike the imminent tax break for purchases of tyres, books (both hard copies and e-books) and One Tambon One Product (Otop) items, purchases of all goods and services with VAT obligations can be claimed under the new scheme, which all consumers can enjoy.
Mr Apisak insisted that the new tax incentive is not a means for the government to seek voter support, but rather is part of a series of measures the Finance Ministry has considered for a while.
Pinsai Suraswadi, director of tax policy and planning at the Revenue Department, said the limited shopping tax break, expected from Dec 15, 2018 to Jan 15, 2019, will cost the government 1.6 billion baht in revenue.
The estimated figure is below the 2 billion baht in income tax claims by 1.4 million taxpayers under the shopping tax break in 2017, as the impending tax incentive, which lets individual taxpayers deduct up to 15,000 baht in taxable income, is limited to purchases of tyres, books and Otop products.
Taxpayers can deduct their taxable income either this year or next.