Hotel taxes in Thailand continue to baffle many property owners, given the volatility or new taxes that often seem to come and go. The surprising increase of the so called “local hotel tax” from 1% to 2% in Phang Nga Province resulted in fear among hotel business operators in other provinces of Thailand like Phuket, that they could also be affected by an increase or the establishment of such “local hotel tax”. The expertise of Phuket lawyers on the matter will be helpful to understand the essence of such hotel tax.
Thailand enacted in 1997 the Provincial Administrative Organization (PAO) Act which created the “Orborjor”, of the Provincial Administrative Organization. The Orborjor is an administrative organization existing in every Thai province. The Orborjor is responsible for certain provincial administrative matters.
Section 65 of the PAO Act empowers the Orborjor to collect a certain fee (hotel tax) from the hotel guests (as defined under the Hotel Act (A.D. 2004)(“Hotel Act”)) at a rate to be defined by a Ministerial Regulation(s) issued under the PAO Act. The Ministerial Regulation No. 4 under Article 2 introduces a maximum fee at a capped rate of 3% of the hotel room charge. Currently no province is entitled to implement a Fee in any amount exceeding 3% of the price the hotel charges a guest for the room. However, every provincial Orborjor in Thailand does have the authority to set the applicable rate, up to 3%, at their sole discretion.
In Phuket, Thailand, such fee is implemented through the Phuket Provincial Administration Organisation By Law on Collection of Contribution Fee of Provincial Administration Organisation from Hotel guests (A.D. 2002) which further regulates the exact amount of Fee (currently 1% of the hotel room charge) payable within Phuket Province. The Fee (1% of the hotel room charge) is payable by the hotel guest.
It is the “Hotel Manager’s” duty to collect the Fee from the hotel guest on behalf of the Orborjor. The Hotel Manager must subsequently remit the collected Fee to the Orborjor within the 10th day of the following month. Both the hotel guest and the Hotel Manager are separately liable under the By Law for payment of the Fee (hotel tax) to the Orborjor. Punishment of one month imprisonment or a fine not exceeding Thai Baht 2,000 or both awaits any hotel guest who refuses to pay the Fee. In the same manner, a Hotel Manager who fails to collect the Fee may receive the punishment of up to three months or a fine not exceeding Thai Baht 5,000 or both.
Additionally, a Hotel Manager who fails to remit the collected Fee to the Orborjor as required may receive punishment of up to three months or a fine not exceeding Thai Baht 5,000 or both. If anyone fraudulently avoids payment, collection or remission of the Fee a punishment of up to six months or a fine not exceeding Thai Baht 10,000 or both may be imposed to the violators or offenders.