Inbound Duty-Free Shops To Be Closed To Boost Local Spending

The cabinet has decided to close duty-free shops in the arrivals areas of international airports to boost spending in domestic stores, projecting an annual increase in local retail spending of up to 3.5 billion baht.

According to Rudklao Intawong Suwankiri, a deputy government spokesperson, the three companies operating inbound duty-free services at eight international airports have agreed to cease their operations, supporting the government’s strategy to enhance domestic retail activity.

Details on when these changes will take effect have not been provided.

On Tuesday, Mrs. Rudklao reported that ministers endorsed guidelines to develop Thailand into a center for tourism and economic activity, as suggested by the Ministry of Finance.

This involves removing tax benefits for bonded warehouses that serve inbound duty-free stores. The ministry will keep track of the effects, she noted.

Three companies hold licenses to operate bonded warehouses for duty-free shops in the arrivals zones of eight international airports: Suvarnabhumi, Don Mueang, Chiang Mai, Phuket, Hat Yai, U-tapao, Samui, and Krabi.

According to Customs Department data, sales at inbound duty-free shops reached 3.02 billion baht in 2023.

The spokeswoman stated that the duty-free operators have submitted letters confirming their compliance with the government policy, agreeing to suspend all inbound duty-free operations until the policy is lifted.

Travelers arriving in Thailand via international airports are typically allowed to buy goods tax-free under certain conditions: purchases for personal or professional use must not exceed a total of 20,000 baht; they can buy up to 200 cigarettes; up to 250 grams of cigars or tobacco, or a combined total of 250 grams; and up to one liter of alcoholic beverages.

Mrs. Rudklao pointed out that the availability of inbound duty-free shops detracts from the potential for spending on domestic products.

Thus, the Ministry of Finance is considering whether to revoke the permits for bonded warehouses that cater to these shops and the tax exemptions on items bought by incoming travelers.

The objective is to encourage the consumption of local products and redirect spending to increase the overall economic value.

The ministry anticipates that closing inbound duty-free shops will boost foreign tourists’ spending by 570 baht per person per trip.

Halting operations of duty-free shops for one year is expected to generate a new cash flow, potentially reaching up to 3.46 billion baht annually, benefiting the retail sector, the tourism industry, and general stores.

This change is likely to create new opportunities and positively impact production, investment, and employment, which would, in turn, increase government tax revenues, according to Mrs. Rudklao.