VAT refund in 2020 budget

VAT refund in 2020 budget

The VAT refund incentive is expected to boost shopping sentiment during the Chinese New Year. (Photo by Patipat Janthong)
The VAT refund incentive is expected to boost shopping sentiment during the Chinese New Year. (Photo by Patipat Janthong)

Value-added tax (VAT) refunds for next year's Chinese New Year shopping will be funded by the 2020 annual budget, says the Fiscal Policy Office (FPO) chief.

Those who qualify for the VAT refund will receive the return by next November, so it is practical to use the 2020 annual budget expenditure to finance the scheme, said Lavaron Sangsnit, director-general of the FPO. The government also did not include the VAT refund in this year's budget expenditure.

The 2019 fiscal year runs from Oct 1, 2018 to Sept 30, 2019.

The shopping tax break is estimated to cost the government around 9 billion baht in foregone revenue.

The cabinet on Tuesday approved the VAT refund for those who spend from Feb 1 to 15, 2019.

Refund claimants are required to pay via debit cards with savings accounts linked to PromptPay at shops that have electronic data capture machines connected to point-of-sale terminals. This enables their spending information to be directed to the Revenue Department.

Spending using the government's welfare smartcards is not entitled to the VAT payback.

The VAT will be refunded through PromptPay, the government's online money transfer system.

Qualified shoppers will be eligible for a 5% VAT refund for every purchase of products and services that includes VAT. The remaining 2% of VAT will go to the government's coffers.

To receive the maximum 1,000-baht VAT refund, shoppers will be required to spend 21,400 baht during the scheme.

Finance Minister Apisak Tantivorawong recently said he hoped the VAT refund scheme prompts a spending spree, helping to maintain the country's economic growth at 4% or above next year.

The government wants to pump up the domestic economy to cushion against a global economic slowdown through a raft of economic stimulus measures, including a 86.9-billion-baht splurge on low-income earners, the elderly and retirees, a VAT return policy for recipients of the government's welfare and subsidy scheme, and a shopping tax break for New Year's period.

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