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VAT refund up to B20k for Chinese New Year

VAT refund up to B20k for Chinese New Year

BANGKOK: The Finance Ministry plans to offer a value-added tax (VAT) refund to shoppers who spend up to B20,000 from Feb 1-15 next year in a bid to boost domestic spending amid murky economic prospects.

tourismeconomicsChinese
By Bangkok Post

Saturday 1 December 2018, 11:10AM


The shopping tax break is scheduled to coincide with Chinese New Year in 2019. Photo: Bangkok Post

The shopping tax break is scheduled to coincide with Chinese New Year in 2019. Photo: Bangkok Post

With a B20,000 maximum and a 5% VAT refund, shoppers will be eligible for B1,000 back, said Finance Minister Apisak Tantivorawong.

Only spending on debit cards with savings accounts linked to PromptPay will qualify for the VAT refund.

The shopping tax break is expected to cost the government B6-7 billion in forgone revenue, Mr Apisak said.

The VAT refund period coincides with Chinese New Year, which falls on Feb 5, 2019.

Thailand has a 7% VAT on domestic purchases of goods and services.

The Finance Ministry’s latest tax break idea comes amid criticism that the government's recent B86.9bn splurge on low-income earners, the elderly and retirees represents pork-barrel policymaking as next year’s general election approaches.

Critics have said the cash handout packages will give the pro-government camp an advantage over other political parties in the general election.

Mr Apisak said he hopes the VAT refund scheme prompts a spending spree and helps maintain the country’s economic growth at 4% or above next year.

In the event that the economy expands by less than 4%, an enormous effort would be required to raise the figure to 4%, he said.

Refund claimants are required to spend at shops that have electronic data capture connected to point-of-sale terminals to enable their spending information to be directed to the Revenue Department.

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The VAT will be refunded through PromptPay, the government's online money transfer system, by March 15.

Financial institutions have requested a fee waiver to add debit features to ATM cards to facilitate the measure, Mr Apisak said.

Unlike the imminent tax break for purchases of tyres, books (both hard copies and e-books) and One Tambon One Product (Otop) items, purchases of all goods and services with VAT obligations can be claimed under the new scheme, which all consumers can enjoy.

Mr Apisak insisted that the new tax incentive is not a means for the government to seek voter support, but rather is part of a series of measures the Finance Ministry has considered for a while.

Pinsai Suraswadi, Director of Tax Policy and Planning at the Revenue Department, said the limited shopping tax break, expected from Dec 15, 2018 to Jan 15, 2019, will cost the government B1.6bn in revenue.

The estimated figure is below the B2bn in income tax claims by 1.4 million taxpayers under the shopping tax break in 2017, as the impending tax incentive, which lets individual taxpayers deduct up to B15,000 in taxable income, is limited to purchases of tyres, books and Otop products.

Taxpayers can deduct their taxable income either this year or next.

 

Read original story here.

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