Import tax disappears in Thailand

Good news for exporters

Just a couple of weeks after industry sources predicted it would come into play, the Thai government has enacted new legislation affecting import taxes on boats.

From 18 February 2004, boats in the following categories imported into Thailand will not have to pay import or excise taxes: (1) inflatables; (2) sailboats (with or without auxiliary motor); (3) motorboats (other than outboard motorboats); (4) other. VAT, currently at 7%, will still apply.

While - pending official translation of the law into English - there are still one or two points that need clarification (for example what exactly is included in the category ‘other’), the new legislation confirms Thailand’s change of stance on the question of leisure boating and its determination to go for growth in this high value tourism sector.

“It will help us to increase the charter fleet immediately and bring more wealthy tourists to Phuket,” said Jan Jacobs, director of Phuket-based yacht management, charter and brokerage company, Thai Marine Leisure.

Moving even more quickly, international yacht charter company, Sunsail, is importing several new yachts from Europe by the end of February, to increase the size of its local fleet. “We’ll find out quickly if there are any unexpected problems with the procedure,” said Kevin Quilty, managing director of Sunsail (Thailand) and chairman of the Marine Alliance of Thailand (MAT).

Throughout 2003, MAT worked closely with Thailand’s Ministry of Tourism and Sport, the ministry charged with the development of new sources of high-value tourism revenue, providing input on the needs and opportunities of the marine tourism sector.

According to sources close to Phuket Governor, Udomsak Usawarangkura, the Phuket provincial administration has been charged with formulating a plan for the development of the entire Phuket / Phang Nga / Krabi area as a marine leisure playground, exciting international marina builders and equipment suppliers with the vision of several new marinas in the area within the next few years.

“That the zero tax has become reality will give a tremendous boost to the domestic market for yachts, particularly luxury motor yachts,” said Grenville Fordham, managing director of Phuket Boat Show organizers Image Asia Events, adding, “At last year’s show there was evidence of strong interest in boat purchase from Thai nationals, who have largely been out of the market for several years. Now that the tax has gone, we expect to see that interest turn into firm sales.”

The reduction of boat taxes to zero comes only a few years after a previous government hiked total taxation on boats to more than 200%, effectively crippling the nascent yachting industry. A cut in 2001 to 47%, radical in comparative terms, did not give the industry the boost in needed.

While the tax reduction is widely welcomed within Thailand’s marine leisure industry, even by domestic boat builders who have seen themselves lose a competitive edge, there is a belief amongst MAT members that this is only the first step. Cumbersome regulations, restrictive immigration procedures, short length of permitted stay for visiting boats and bizarre ‘taxes’ levied by local authorities still remain to inhibit the potential of Phuket as the region’s top marine playground.