Thailand ends inbound duty free shops at airports
Thailand’s Airports of Thailand Public Company Limited (AOT) has announced the closure of all inbound duty free shops operated by King Power Duty Free Company Limited (KPD) at its airports, effective August 1, 2024. This move follows a Thai Cabinet decision aimed at promoting domestic consumption and increasing economic value.
Government initiative to boost local spending
The initiative stems from a Cabinet meeting on November 28, 2023, which approved measures to promote Thailand as a tourism and spending hub. The Ministry of Finance (MOF) was tasked with studying the feasibility of revoking licenses for inbound duty free shops and their associated tax exemptions.
On July 2, 2024, the Cabinet acknowledged the MOF’s proposed guidelines for ending tax benefits for bonded warehouses connected to inbound duty free shops. The goal is to “redirect the spending amounts to circulate more efficiently within the country and increase overall economic value added.”
King Power cooperates with closure plans
Following the Cabinet’s decision, the Customs Department requested cooperation from KPD and AOT to implement the changes from August 1, 2024. KPD has agreed to cease operations of its inbound duty free shops at several airports:
- Suvarnabhumi Airport (BKK): approximately 1,870.69 square meters
- Phuket International Airport (HKT), Chiang Mai International Airport (CNX) and Hat Yai International Airport (HDY): total of 217.45 square meters
- Don Mueang International Airport (DMK): 162.46 square meters
AOT board approves closure and reclaims space
The AOT Board of Directors, in a meeting held on July 30, 2024, approved the cessation of KPD’s inbound duty free operations at the aforementioned airports. AOT will reclaim a total area of approximately 2,250.60 square meters.
Financial impact on AOT
The closure of KPD’s inbound duty free shops will result in revenue declines for AOT:
- Approximately 1.70 million baht (US$48,571) per month in office and state property rent at BKK, HKT, CNX and HDY
- Approximately 126.25 million baht (US$3,607,143) per month in minimum guarantee at BKK for the 2024-2025 contract period
- Approximately 8.41 million baht (US$240,286) per month in minimum guarantee at HKT, CNX and HDY
- Approximately 6.96 million baht (US$198,857) per month in minimum guarantee at DMK
AOT has stated that it has “already prepared projects to increase revenue from other commercial activities” to offset these losses.