Thailand to Cut Import Tariff on Luxury Goods

The Thai government is considering to slash import tariffs on selected items of luxury products, local media reported on Sept. 10, 2013.

The Finance Ministry plans to seek the Cabinet's approval for cutting the duties from currenct 30-40 percent to 0-5 percent within one month or two. Perfumes, watches and clothing will be the first three categories to benefit from the cut.

The move, aimed to position Thailand as a "shopping paradise" for both Thais and foreign visitors, has received positive response from tourism operators and importers.

Pornthip Hirunkate, vice president of the Tourism Council of Thailand, said the tax cut would be a boon to the travel industry as Thailand competes head-on with Singapore and China's Hong Kong to become a shopping center in the region.

According to a ministry source, the proposed cuts in import tariffs would cost the government over 100 million baht in direct lost revenue, but this would be offset by an increasing number of tourists, who would spend more and stay longer.

However, the proposal has drawn strong opposition from many local manufacturers of luxury products, who are worried that customers will switch to imported items, which will become cheaper.

Lavaron Sangsnit, deputy director-general of the Fiscal Policy Office under the Finance Ministry, argued any tariff cut must take into account the affect on local manufacturers who produce similar products.

He suggested that import duties cuts should only be applied on products with no domestic production equivalents.