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Luxury Tax

Call for phase-out of import duty on luxury fashion goods

TSCA president Wallaya Chirathivat

TSCA president Wallaya Chirathivat

The Thai Shopping Centres Association (TSCA) has proposed that the ruling junta gradually cut the import duty charged on luxury fashion brands by 5-10 percentage points annually, with the goal of becoming a duty-free country for such items within five years.

Such a move would raise Thailand's competitiveness against other major shopping destinations in the region, especially Singapore and Hong Kong, which have totally lifted the tax burden on fashion products in order to attract foreign shoppers, who prefer luxury international brands.

TSCA president Wallaya Chirathivat said such a measure would help the Kingdom become No 1 within the region in retail and tourism, which was important in light of the implementation of the Asean Economic Community (AEC) next year.

Thailand currently imposes a high import duty of between 30 per cent and 60 per cent on luxury fashion brands, she said.

"We would like the junta or the new government to gradually reduce the import duty on luxury goods by between 5-10 percentage points annually, while evaluating the responses of international shoppers.

"From my point of view, the government would be able to earn higher income from international shoppers by waiving import duty charged on luxury fashion brands, when compared with the current earnings derived from import duty," she said.

Wallaya added that besides tourism and shopping, related sectors such as hotels, restaurants and airlines would benefit from the removal of import duty.

The TSCA aims to turn Thailand into a regional shopping hub that offers "the best lifestyle shopping experience in Asean" in a bid to push for Thailand to become a world-class tourist destination and a "shopping paradise", she explained.

"We have announced a policy to support Thailand becoming a trade and tourism hub for Asean and the world, as we see AEC integration as a milestone that will help propel Thailand to become the centre that connects Asean member states. Thanks to its ideal geographical location in the heart of Asean, Thailand can thrive as an economic hub and a foremost shopping and tourist destination in the region," said the association chief.

According to the Tourism and Sports Ministry, overall income generated by the tourism industry reached Bt1.17 trillion last year, accounting for about 10 per cent of the country's gross domestic product. However, shopping contributed just 2-3 per cent of GDP, she said.

"We have a lot of foreign tourists coming into the country every year. However, we have not yet been able to stimulate them to spend more money on shopping. What we have to do is to promote Thai fashion brands to be known at the international level. We also need to attract more Asean luxury tourists into the country, as they are acknowledged as being big spenders," said Wallaya.

She added that many Asean luxury-end tourists had become "addicted" to luxury brands, but Thailand was currently losing out as it was burdened by higher import duty on luxury fashion brands compared to Singapore and Hong Kong, which both promote themselves as duty-free shopping destinations.

TSCA's members have plans to invest a substantial amount in new major projects from 2014-2016, she said, adding that these projects are positioned to be globally recognised and will be located in areas including renowned shopping streets and downtown Bangkok, paving the way for the city to become a fully fledged shopping destination for tourists.


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