Thailand set to end on-arrival duty free at airports

By Luke Barras-hill |

Inbound travellers to Thailand’s eight international airports, including Bangkok Suvarnabhumi, will be unable to make duty free purchases in the future. Credit: 1000 Words/Shutterstock.

Airport duty free arrivals shops are to be shuttered across Thailand in a move that will choke off a Bht 3 billion/$82.4 million industry revenue stream as post-Covid visitor numbers continue to climb.

Confirmation of the news, which TRBusiness has on good authority, follows an official instruction from Thailand’s government to operators as part of a broader economic plan to stimulate domestic spending from tourists.

During a cabinet meeting yesterday (2 July), ministers acknowledged a Ministry of Finance proposal concerning the suspension of the use of tax privileges on bonded warehouses for the purposes of import duty free shop sales, aligned to guidelines on promoting Thailand as a tourism and spending centre.

The decision is understood to be permanent, rather than temporary, though information on the exact timing is yet to be outlined by cabinet and subject to procedural considerations, this publication understands.

It will affect three licensees permitted to operate bonded warehouses serving inbound duty free stores, including King Power Corporation, operating at the country’s eight international airports – Suvarnabhumi, Don Mueng, Chiang Mai, Phuket, Hat Yai, U-Tapao, Sumui and Krabi.

Bht 3.5bn local boost, say officials

All three have written to the Director General of the Customs department agreeing to suspend those operations that benefit from tax privileges on the sale of international arrivals goods.

Sales at inbound duty free shops totalled Bht 3.02 billion last year, according to customs department statistics, with spending gains at local retail outlets projected to be in the order of up to Bht 3.46 billion annually.

A cabinet transcript seen by this publication read: “The Office of the Civil Service Commission (OCSC) has an idea to study the appropriateness of cancelling the permission to set up bonded warehouses for sales for duty free shops on arrivals, including the duty exemption for goods purchased from duty free shops for incoming passengers, in order to promote domestic consumption and use of goods, with the aim of changing the spending limit at such duty free shops to circulate within the country, creating greater efficiency and overall added economic value.”

Current tax free allowance rules permit inbound travellers to purchase up to 200 cigarettes (or 250gm of tobacco or cigars) and 1 litre of alcohol.

A King Power Duty Free store at Chiang Mai International Airport.

Arriving travellers are able to carry goods for personal and professional use with a combined value not exceeding Bht 20,000.

“Arrivals isn’t a significant part of overall sales,” a senior retailer source told TRBusiness. “I don’t think the decision will affect things too much, only maybe on some individual skus i.e. spirits like medium-priced whisky.”

Decision ‘regrettable’

Unconfirmed reports circulating at the end of last year pointed to the potential scrapping of the concession following an approval in principle of measures by cabinet aimed at promoting Thailand as a tourism and spending hub.

Government spokesperson Chai Wacharonke briefs media on the outcome of Tuesday’s cabinet meeting. Source: thai.gov.go.

Ministers say that by ceasing airport arrival duty free sales, the average spend per tourist will increase by approximately Bht 570 in the first year.

“Thai travellers may choose to spend on duty free products in their home country as a replacement or spend more on the same type of products domestically, depending on different decision factors,” added the cabinet transcript.

Sunil Tuli, President of the Asia Pacific Travel Retail Assocation (APTRA) said: “APTRA has liaised regularly with King Power on this situation since the initial announcement in December 2023.

“The closure of arrivals stores in Thailand is part of a comprehensive initiative prioritised by the new government to stimulate the domestic market economy and, regrettably, we have been unable to influence the decision.

As yet, the planned date of implementation has not been officially communicated although we understand all arrivals stores will close within the next two months approximately.”

Visitors have been flocking back to the Southeast Asian country since it ended its strict border control measures in the latter stages of 2022.

Last year, Thailand welcomed more than 28 million foreign tourist arrivals to its shores.

In March, Prime Minister Srettha Thavisin enacted a visa-free policy with China and the country’s tourism authorities are tipping around eight million Chinese tourist arrivals this year.

TRBusiness has approached its sources for further commentary and aims to bring you more on this story…

READ MORE: Thailand-China visa exemption hones King Power’s shopper marketing efforts

READ MORE: King Power partners With AOTGA to launch inclusion campaign

READ MORE: King Power readying next chapter at ‘One Bangkok’

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