Tax relief for travellers nears

The Revenue Department has proposed that individuals be allowed to deduct the cost of domestic package tours or accommodation from personal income tax at a maximum of 15,000 baht a year.

Corporations would also be able to claim up to twice the cost of seminars and trainings.

The twin measures, which are pending approval by finance permanent secretary Rungson Sriworasat, are aimed at stimulating domestic tourism and the national economy, Revenue Department director-general Prasong Poontaneat said.

The tax deduction for travel expenses is expected to take effect this year and run through the end of next year.

The package is nothing new, as the deduction for individuals was once adopted by a Democrat-led government, while the corporate deduction was introduced by the ousted Yingluck Shinawatra government.

The recent political impasse that plagued the country for almost five months earlier this year took a toll on the tourism industry, which accounts for almost 10% of GDP.

And even though the turmoil has ended, martial law, invoked by the National Council for Peace and Order after the May 22 coup, remains a major stumbling block to an industry recovery.

Many foreign travellers' are prevented from flying to Thailand since travel insurance policies often do not provide protection in countries under martial law.

The Tourism Authority of Thailand has lowered this year's forecast to 25.5 million arrivals spending 1.9 trillion baht from an earlier projection of 28 million arrivals and 2 trillion baht.

Mr Prasong said corporations would be able to claim double what they paid for seminar or training expenses without a ceiling limit.

Estimates show the measure would cost the government just under 2 billion baht, but the Revenue Department hopes to recoup the loss via higher value-added tax (VAT) collection amid more domestic consumption from travelling and organising seminars.

Domestic consumption, which has been tepid since the second half of last year, is regaining momentum, as witnessed by VAT on domestic consumption surging 8.5% last month after July's small 1.97% increase.

Tisco Securities senior economist Kampon Adireksombat said the tax measure was aimed at boosting the tourism industry by targeting taxpayers who had been hit hard hurt by the economic slowdown.

However, the impact could be minimal since local travellers generally contribute such a small proportion of the country's tourism revenue, he said.

The research house is maintaining its growth forecasts for the Thai economy at 1.5% this year and 5.3% next year.

Surapong Techaruvichit, president of the Thai Hotels Association (THA), said: "Both measures will benefit domestic tourism, but they cannot boost the overall tourism industry. Tourism needs more measures, with lifting martial law the priority."

However, the government should seriously push the tax incentive and continuously promote domestic travel until the programme expires, he said.

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