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Thailand: Shopping tax break runs Nov 11-Dec 3
The Revenue Department estimates that 22.5 billion baht worth of shopping tax breaks will be claimed this year, costing the government 2 billion in revenue while spurring 10 billion baht in spending.
Individual taxpayers deducted 15 billion baht worth of shopping in 2016 when a similar tax incentive was introduced for 18 days, costing the government 1.8 billion baht in revenue, said Patricia Mongkhonvanit, deputy director-general and acting spokeswoman for the department.
Airline ticket purchases can be used to claim the tax deduction if they are subject to VAT and travel is made from Nov 11 to Dec 3, Ms Patricia said.
The cabinet approved on Tuesday the shopping tax break to spur year-end consumption during the festive season. The incentive will let individual taxpayers deduct up to 15,000 baht of taxable income from the value of goods and services bought between Nov 11 and Dec 3.
This is the third straight year for a year-end tax incentive. Last year a similar incentive was offered during Dec 14-31, while the scheme in 2015 lasted only seven days. The past two years, only purchases from retailers and distributors registered under the value-added tax system were eligible for the tax deduction.
Finance Minister Apisak Tantivorawong attributed the early schedule of this year’s tax break to the government’s intention to persuade the public that such a tax break is needed every year.
Salinla Seehaphan, corporate affairs director at Tesco Lotus, said the company welcomes the government’s measure.
“Timing is not the most important factor, because we are entering the seasonal period anyway,” she said. “We are ready to offer promotions to cash in on the tax break during this period.”
Paibul Kanokwattanawan, group chief executive of The Mall Group, said peak retail spending normally takes place from Dec 15 to Jan 2.
“But the new tax break will definitely boost shopping sentiment and accelerate consumers’ buying decisions,” he said.
Amonthep Chawla, head of research at CIMB Thai Bank, said the tax break is expected to partly spur private consumption among those with purchasing power but lacking the confidence to spend. The measure borrows future demand to boost current consumption, meaning consumption could slow somewhat after the tax break ends, he said.
“As the government issues the same measure every year, people might take it for granted and it could lose its effectiveness,” Mr Amonthep said.
He said the government should focus on supporting purchasing power for the long term by increasing people’s income and issuing measures for better income distribution.
Capital Nomura Securities (CNS) analyst Yuvanart Suwanumphai said the tax break will boost stocks relating to food and drinks, hotels, aviation, services, spas and the consumer sector, as these businesses will benefit from consumer spending. She recommended Central Plaza Hotel Plc (CENTEL), Minor International Plc (MINT) and Erawan Group Plc (ERW).
CNS remains bullish on the hospitality business because it expects the sector’s earnings this year to increase by 7% year-on-year.
Ms Yuvanart said the scheme will help shore up economic growth this quarter, as businesses have to file a VAT return and pay the Revenue Department within 15 days of the start of each month.
Source: https://www.bangkokpost.com/business/news/1356563/shopping-tax-break-runs-nov-11-dec-3