Thailand’s move to end duty-free on arrival hits headwind from airports
AOT (Airports of Thailand) has expressed concern about the move to abolish of duty-free shops upon arrival, complaining it would reduce revenue shared with duty-free operator King Power.
The Finance Ministry has proposed cancelling duty-free for arriving passengers as part of measures to encourage foreign tourists and returning Thai travellers to make purchases within the country.
The aim is to turn Thailand into a top international shopping destination, boosting sales of high-value locally made items such as perfumes, clothes and fashion bags.
The Cabinet approved the measures in principle on Tuesday.
Duty-free shops in departures will stay in place.
The Finance Ministry will hold talks with the Customs Department and Excise Department on Friday to review the measures before they go back to Cabinet for final approval.
AOT and King Power have been in talks with the Customs Department over the move to abolish duty-free on arrival.
The Excise Department is now working to adjust the tax structure for the new measures, focusing mainly on beverage products. The adjustment aims to make alcohol prices more appealing to both international tourists and Thai citizens, encouraging them to buy more domestically.
"Eliminating duty-free shops upon entry will likely lead tourists to spend on products within the country. Simultaneously, a reduction in beverage taxes will incentivise tourists to purchase beverages locally, contributing to the circulation of money within the economy. With an appropriate tax structure for beverages, Thai citizens will find it more affordable to buy beverages domestically," said Finance Ministry permanent secretary Lavaron Sangsnit.
However, AOT President Kerati Kijmanawat clarified that the idea of cancelling duty-free shopping on arrival remains a proposal at this stage. The Cabinet has instructed further study of the details and potential benefits before issuing any directives to AOT.
AOT emphasised that the development of duty-free shops aligns with global trends to enhance passenger services at airports worldwide. It said the government's concern about the impact on domestic spending prompts the need to assess whether tourists would opt for duty-free shops at their departure airports in the absence of such facilities in Thailand. This evaluation is critical for determining the overall value and potential impact on revenue-sharing agreements at other airports managed by AOT, it said.
Furthermore, the cancellation of duty-free shop areas at all six airports under AOT management would affect existing concession agreements with private entities, particularly regarding revenue sharing based on allocated commercial areas, AOT said.
