The Fiscal Policy Office (FPO) is seeking measures to boost the tourism sector and increase its contribution to GDP amid heightened external headwinds.
The Finance Ministry's think tank has floated an idea to offer tax incentives to large corporations to persuade them to help develop tourism and improve the quality of goods produced by rural residents to sell to tourists under the social business concept, director-general Krisada Chinavicharana said.
He gave Japan as an example. Japanese companies have developed products made from chestnuts to help a chestnut-growing community become a tourist destination.
Tourism now accounts for a meagre 10% of GDP. Foreign tourist arrivals reached just under 30 million in 2015. Tourism revenue totalled 2.2 trillion baht last year including 1.4 trillion from foreign tourists.
- Summary of the plan: Tourists 'offset' falling exports
Foreign tourist arrivals are expected to increase to 32.5 million this year, while the Tourism Authority of Thailand revised up its tourism revenue target Monday to 2.41 trillion baht from 2.3 trillion previously predicted.
The government is abandoning the decades-long export-driven economy and steering the country towards a domestic-focused economic model to shield Thailand from growing uncertainty from the uneven recovery of advanced economies and China's dimming economic prospects.
The world's second-largest economy is Thailand's largest export destination, accounting for 15-16% of outbound shipments, which represent 70% of GDP.
As state investment in infrastructure projects such as rail and mass transit could take until the second half of this year to bear fruit for the economy and private investment remains in the doldrums, the government has chosen tourism and domestic consumption, particularly by high and middle-income people, as quick instruments to offset exports.
The Customs Department recently said it would cut the 30% import duty on luxury items in a bid to boost tourists’ spending.
Mr Krisada said the Revenue Department had formulated tax measures to support social businesses by allowing such companies to deduct expenses incurred from social business activities of up to 2% of their net profit.
Profits from social businesses will be exempt from tax if they are used to invest more in social activities.
The tax privileges are subject to cabinet approval.
The Revenue Department has defined a social business as any investment with the aim of addressing social problems in rural communities and environment problems.
Profit maximisation is not the main goal of social businesses.
Their profits are invested further for social activities without giving any dividends to shareholders.