The Bangkok Metropolitan Administration (BMA) is considering a 3% hotel tax as a means to increase revenue, though the Thai Hotels Association (THA) has advocated for a lower initial rate of 0.5-1% coupled with support measures for tourism operators impacted by the Middle East conflict.
Bangkok governor Chadchart Sittipunt has previously put forth proposals to amend the BMA Act, which would empower the city to introduce new local taxes, including a 3% levy on hotel and accommodation charges. The BMA currently states it lacks the legal authority to implement such a tax, which is estimated to generate approximately 1 billion baht annually, while provincial administrative organizations already possess this power.
THA president Thienprasit Chaiyapatranun indicated that hotel operators in Bangkok are not against a levy but believe the proposed 3% rate would impose an excessive burden on businesses during a period of tourism slowdown. He referenced the 1997 Provincial Administrative Organization Act, which permits provincial bodies to collect a hotel maintenance fee of up to 3% of room charges, noting that tax rates differ across provinces, with most not collecting the maximum. Phuket, for instance, currently charges 1%, although there have been discussions to increase it to 3%.
Thienprasit cautioned that if the tax is implemented, hotels might be compelled to raise room rates to offset the additional costs, potentially dampening tourism. Given that the industry is still grappling with volatile energy prices and high travel expenses, he suggested the BMA should commence with a 0.5-1% rate rather than immediately imposing the full 3%. He also urged the authority to consider how tax revenue could be reinvested in the hospitality and tourism sector, such as through supporting sustainability standards or funding marketing campaigns to attract more visitors.
The proposal also brings to light the issue of unfair competition between licensed hotels and illegal accommodations, which can avoid such taxes, Thienprasit pointed out. He stated that a significant portion of Bangkok’s hotel rooms booked through online travel agents are located in illegal establishments. “Whenever the authorities seek to raise revenue, they first turn to businesses that comply with the law, whether through new taxes or higher labour costs,” he remarked. “If the BMA raises this tax, the THA wants to know how it plans to tackle illegal operators, particularly those using modified buildings that could compromise guest safety.”
As of August 1, Thailand had welcomed 18.5 million foreign tourists this year, a decrease of 3% year-on-year, generating 896 billion baht in revenue. The BMA has also proposed increasing the land and building tax rate for agricultural land to promote more productive land use and close loopholes that enable landowners to evade taxes by planting minimal crops. Thienprasit suggested this adjustment could prompt some landowners to sell their plots rather than invest in new developments, especially if their locations are not commercially appealing, and that some may find investing in new projects financially unviable as land tax is calculated based on asset value and location rather than actual business revenue.