The Thai Retailers Association (TRA) is calling on the government to establish an instant VAT refund system for tourists and create a free-trade-zone sandbox in popular tourist locations like Phuket. This initiative aims to enhance Thailand’s status as a premier shopping destination in the ASEAN region.
TRA President Nath Vongphanich highlighted the numerous challenges facing the Thai retail industry, as indicated by the declining Retail Business Confidence Index. This data reflects decreasing consumer spending, a slowdown in tourism growth, and an export sector hindered by tariff barriers.
According to a report from Kasikorn Research Center (K-Research), the Thai retail sector is expected to experience an average growth rate of 3.4% in 2024-2025, a decline from the 5.9% growth seen in 2022–2023.
To encourage spending and attract more visitors, the association has proposed an instant tax refund scheme, allowing tourists to receive a 7% VAT refund. To motivate tourists to increase their spending, Mr. Nath suggested setting the refund threshold above average spending levels. This strategy is intended to incentivize tourists to spend more in order to qualify for the refund, ultimately benefiting the retail sector. The TRA proposed a minimum spending threshold of 3,000 baht per day at a single store.
Additionally, he noted that this scheme is comparable to China’s recent introduction of a 500-yuan (approximately 2,500 baht) instant tax refund in major tourist cities such as Shanghai, Beijing, and Guangzhou.
The association also recommended that the government reduce import duties on lifestyle products, particularly in the fashion, cosmetics, leather goods, and fragrances sectors. This effort could initially focus on products imported from the US, tested through a duty-free “sandbox” in popular tourist areas like Phuket, thereby fostering increased tourist spending and promoting Thailand as a shopping haven in the region.
Lowering import taxes on US lifestyle products would also enhance Thailand-US trade relations while providing Thai consumers with greater access to high-quality international goods.
Mr. Nath indicated that the TRA intends to discuss these issues with the Ministry of Finance in the second or third quarter of this year.
In response to the growing influx of inexpensive Chinese goods into the Thai market, particularly in the context of the ongoing trade war and oversupply in China, the TRA has urged the government to strengthen inspection protocols for all imported goods. The association emphasized the need for advanced technology to improve accuracy and compliance enforcement in product inspections.
Furthermore, the TRA advised that a 7% VAT should be applied to all online imported goods from the first baht onward, eliminating the previous exemption for items valued under 1,500 baht. This policy should be solidified as permanent legislation to ensure consistent enforcement.
Additionally, the association called for revisions to inadequate e-commerce regulations to effectively address products sold on cross-border e-commerce platforms. It also recommended proactive measures to eliminate nominee businesses and urged the government to address unauthorized use of production rights for goods manufactured in Thailand that are intended for re-export.
