Complete revamp of the VAT refund scheme will see it now available at 8 international airports and the ceiling raised to ฿30,000. From the end of November paperwork will not be needed for foreign tourists using an app where VAT repayments can be processed seamlessly to a credit card or social media account.
The Thai government is to make an app available for VAT refunds to foreign tourists at the end of this month where cashback payments can be made without paperwork verification and paid directly to a credit card. It comes as the government has also increased the ceiling on VAT reclaims per tourist to ฿30,000, extended the scheme to 8 international airports and appointed a 7/11 related firm to issue cash refunds in central Bangkok at selected convenience stores.
The Thai Ministry of Finance has announced that from the end of November VAT refunds will be able to be claimed more conveniently using an app which makes use of blockchain technology.
This exciting development also gives us a preview of what the tax system could develop into as the government and financial institutions gradually make more use of blockchain technology.
Blockchain means no verification paperwork
The use of this technology means that there will no longer be a need for paperwork verification as details of purchases will automatically have been entered into the blockchain system and shared with the Ministry of Finance and Revenue offices.
Finance Minister signs a memorandum with Krungthai Bank covering three pilot projects
This week, the Thai Finance Minister, Uttama Savanayana, signed a memorandum of understanding with the state-owned Kringthai Bank which handles tax repayments on behalf of the government. The agreement with the bank covers three pilot projects using blockchain technology including VAT refunds for tourists.
The other two projects include a facility which will allow members of the public to apply and be issued with scripless savings bonds while the other is a more streamlined system allowing for letters of credit relating to state procurement including the inspection collateral, to be issued more conveniently.
With the help of blockchain technology, the new savings bond option for the public, bonds will now be issued in 2 days whereas up to now the processing time has been 15 days
A revolution for tourist VAT refunds
For the government’s VAT refund scheme for foreign tourists, this will be a revolution.
Tourist can be repaid their VAT refund money via their credit cards or WeChat which is particularly popular with Chinese tourists.
It is estimated that 2 million foreign tourists use the VAT refund system when purchasing goods and services in Thailand.
The amounts spent every year is ฿50 billion. The Minister pointed out that 70% of these tourists are Chinese who are said to be particularly averse to holding cash.
Scheme extended to 8 international airports and ceiling raised to ฿30,000
In October, the Thai government also made significant changes to the VAT refund scheme. For one, they extended the amount of VAT that can be reclaimed from ฿12,000 to ฿30,000.
They also extended the scheme to 8 international Thai airports.
Up to now, the scheme was only operated via Suvarnabhumi and Don Muang Airports.
Under the new regime, it is being extended to Chiang Mai, Chiang Rai, Phuket, Hat Yai, Krabi, Samui, U-Tapao and Surat Thani airports.
7/11 cash refunds in Bangkok
The government, also in mid-October, designated a company linked with the popular 7/11 chain to process cash VAT refunds for tourists in Bangkok.
These can be processed at 3 designated 7/11 stores in the heart of the city.
Thai Retailers Association criticise the move not to use key downtown shopping centres for VAT refunds
This move drew a rebuke from The Thai Retailers Association whose President Worawut Oonjai castigated the move to grant the franchise for such payment to the 7/11 linked Counter Service Co.
He represented a rival company, VAT Refund Centre (Thailand) Co. which had proposed that the VAT refund facilities in downtown Bangkok be handed at 5 well-known shopping centres namely CentralWorld, Central Chidlom, The Emporium, Robinson Sukhumvit and Siam Paragon.
He pointed out that his group had spent nearly a year preparing for such an initiative.
Further reading:
Thailand embraces the world of cryptocurrency as bond market to move into the blockchain era
