Hoteliers back review of tax structure
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Hoteliers back review of tax structure

Operators push return to using revenue as a reference

An aerial view of high-rise buildings in Bangkok.
An aerial view of high-rise buildings in Bangkok.

Hotel operators are in agreement with the Bangkok governor, who has urged the government to review the tax structure, which now uses land value as a benchmark rather than revenue.

Bangkok governor Chadchart Sittipunt said revenue from tax collection significantly dropped after the country implemented the new land and building tax based on land value, replacing a tax structure that used business income as the reference.

Marisa Sukosol Nunbhakdi, president of the Thai Hotels Association (THA), said hotel operators would agree if the government were to revert to the previous method of tax collection based on income generated from each plot of land.

She said this method is more reasonable for hotels, which normally have inconsistent levels of revenue compared with shopping malls or office buildings, which receive fixed and stable income from their tenants.

Calculating tax from income could help the government regain an appropriate level of revenue and would help reduce inequality as there are some types of businesses that pay a lower rate of tax when using the land price as a benchmark, said Mrs Marisa.

She said the current tax rate causes problems for hotel operators when there is a crisis, as following the pandemic some hotels remained closed and had no income, yet were still taxed at the same rate.

Many smaller hotels in the city centre face a hefty tax rate as their locations have a high appraisal value based on the land, even though their revenues have still not fully recovered.

Some hotels opted to close all their buildings or partial areas for renovation. Under the previous method of assessing tax, operators were allowed to calculate the tax based on the actual space that was being utilised.

"We would approve the government reverting to the previous tax collection scheme," said Mrs Marisa.

"If we earn more income, we would be delighted to pay a higher amount of tax."

According to the hotel business operator sentiment index in May, average occupancy dropped to 51.4% from 56.7% in April because it is the low season and the domestic stimulus programme ended.

The THA and Bank of Thailand anticipate average occupancy to decrease to 48% this month.

She said foreign tourists began to dominate the market in Thailand last month, as 55% of hotels said more than 50% of their guests were foreigners, particularly from Asia, the Middle East and China.

Mrs Marisa said five-star hotels outperformed other segments as 59% of their guests had a longer average stay than registered before the pandemic, while most hotels reported that 47% of guests were now staying for longer than guests did before the pandemic.

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