Tax breaks for tourism spending in secondary provinces from Jan 1 to Dec 31, 2018 will go before the cabinet today. The move is intended to distribute income to these provinces and make the recovery more broad-based.
Those who spend on accommodation and food and drink at these secondary locations next year can use the receipts to claim a tax deduction of up to 15,000 baht, said Prasong Poontaneat, director-general of the Revenue Department.
The department allows travellers to use receipts instead of full tax invoices to claim the deduction, as most tourism operators in secondary provinces make an income of less than 1.8 million baht a year, Mr Prasong said.
The tax-collecting agency requires all operators earning at least 1.8 million baht to register for the value-added tax system.
The Tourism and Sports Ministry will decide which provinces will enjoy the tax incentive, Mr Prasong said.
The government is pushing efforts to stimulate rural economies towards broad-based growth. Despite solid economic growth of 3.8% for the nine months to September and healthy exports, rural areas have been left behind.
Mr Prasong said that although the Revenue Department will lose some money from the tax breaks, it is still worthwhile distributing income to provincial economies.
The tourism tax deduction scheme covers secondary provinces that accommodate fewer than 4 million tourists per year, said Tourism and Sports Minister Weerasak Kowsurat.
While major markets like Bangkok, Phuket, Chiang Mai, Chon Buri and Songkhla cannot participate in the tax break scheme, there are more than 61 eligible provinces, including Lampang, Loei, Trat, Nan, Chaiyaphum, Suphan Buri, Samut Sakhon, Chanthaburi, Buri Ram and Chumphon, Mr Weerasak said.
Each tourist can deduct up to 15,000 baht worth of purchases made during trips to these provinces from their personal income tax, said Yuthasak Supasorn, governor of the Tourism Authority of Thailand (TAT).
Thai tourists will be able to receive receipts for tourism products and services in these 61 provinces starting from Jan 1, 2018.
In August, the tourism authority revamped its efforts to boost domestic tourism in the last quarter of 2017 by requesting the support of the Finance Ministry. That initial attempt, however, was rejected due to a lack of clear guidelines for implementation.
The TAT has been endorsing tourist tax breaks for years, especially in low-season periods or after crises, in an attempt to boost domestic travel.
In the past, deductions were capped at 30,000 baht and were extended at all tourist attractions across the country. This time, the deduction was capped at 15,000 baht and extended to only 61 provinces.
The ministry has also floated the idea of giving coupons valid in villages and communities in secondary cities, as coupons can help small operators and entrepreneurs in remote areas and are not linked to the tax system.
Supawan Tanomkieatipume, president of the Thai Hotels Association, said the new tax break could hit major destinations like Chiang Mai or Pattaya because tourists may move their holiday destinations to second- or third-tier areas.
The last scheme, by contrast, boosted arrivals to major metropolitan areas.
In related news, Mr Prasong estimates that more than 80% of individual taxpayers will file a tax return during January to March next year for the 2017 tax year online, up considerably from 60% in the previous year.
The Revenue Department will be able to give the rebate within minutes after the tax return is filed in full, he said.
The Revenue Department expects the e-business tax, a levy on any online transaction that takes place in Thailand, regardless of the e-commerce operator's location, to be considered by the Finance Ministry next year.
After a recent public hearing on the tax, 29 people had agreed with collecting the tax and 35 disagreed, Mr Prasong said.
The draft bill of the e-business tax will allow the government to charge online vendors up to 15% in withholding tax to level the playing field.
Mr Prasong said e-donations are a channel that people can use to help stem money leakage, while donors in turn can claim the charitable deductions on their tax returns.
At present, Krungthai Bank has rolled out the service for online donations to Wat Phra Si Rattana Mahathat in Phitsanulok province.