Thailand’s Planned Alcohol and HOREC Tax and Duty Reforms: Boosting Tourism and Economy

Home » Thailand’s Planned Alcohol and HOREC Tax and Duty Reforms: Boosting Tourism and Economy

In a strategic effort to revitalise its tourism sector and spur economic growth, the Thai government has recently enacted tax and customs duty reforms targeting alcohol and luxury food imports, amongst other areas. These measures, encompassing changes in excise taxes, duty exemptions, and structural adjustments, are designed to make Thailand a more appealing destination for tourists and businesses.

Government Measures to Boost Tourism and Economic Growth

Recognising the crucial role of tourism in the country’s economic development, the Thai government has unveiled a comprehensive set of measures to position the country as a premier tourist destination. The focus is on improving the quality and diversity of food and beverage establishments, fostering a positive image, and increasing spending by both international and domestic tourists.

Structural and tax rate adjustments are at the forefront of these changes. The goal is to incentivise tourists to spend on food, beverages, and local attractions, ultimately contributing to the growth of the tourism industry. These new measures are expected to increase tourist spending on alcoholic drinks by 3% and increase tourist-generated revenue by B2.9 billion, with an average spending per person increasing to B43,400.

Reduction of Excise Tax on Wines

A pivotal reform is reducing the excise tax on wines and fortified spirits, transitioning from a tiered tax system to a single % ad valorem tax of 5%. The government has lowered the excise tax on wines from 1,500 THB per litre of alcohol to 1,000 THB per liter, making wines more affordable and encouraging consumers to explore a broader range of products.

As for locally-made liquor, the excise tax will be waived but the alcohol duty for liquor with more than 7% alcohol volume will remain unchanged.

Read more about wine taxes in Thailand here.

Cancellation of Price Tier and Implementation of Single Ad Valorem Tax

The government has eliminated the price tier system, which previously imposed an additional 10% on the sale price for retail prices above 1,000 THB. Instead, a single ad valorem tax of 5% has been introduced. This simplification creates a more transparent and predictable environment, fostering fairness and equality for businesses and consumers.

Duty Exemption on Wine Imports

To enhance international trade, Thailand has exempted duty on wine imports from all countries, reducing previous rates ranging from 54-60%. This move is particularly advantageous for countries without a free trade agreement with Thailand, such as Italy and France, fostering economic partnerships and strengthening diplomatic ties.

Reduction of Excise Tax on Entertainment Venues

The government has reduced the excise tax on entertainment venues, including nightclubs, discos, bars, and cocktail lounges, to stimulate economic activity from 10% to 5%. This measure aims to incentivise the nightlife industry and attract domestic and international patrons, aligning with short-term economic goals. The lowered rate will remain applicable until Dec 31, 2024.

Conclusion

Thailand’s recent tax reforms represent a strategic move to revitalise the tourism sector and propel economic growth. From excise tax reductions to duty exemptions, the government’s multifaceted approach aims to create a favourable environment for businesses, tourists, and international trade partners. As Thailand embraces these reforms, the expected impact on tourism expenditure, business development, and diplomatic relations is substantial, marking a positive step towards economic recovery and global integration.

At Silk Legal, we can provide a range of services around company formation, necessary licenses for importing and exporting goods, and general regulatory guidance. This article is for information only, and while we have tried to keep our updates as accurate as possible, there may be errors and changes to proposed legislation that can affect your decisions. Please feel free to contact us for a free consultation at info@silklegal.com.

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