Thailand has agreed to exempt foreign actors who are shooting in the country from paying tax, but has not approved a raft of other potential incentives including reduction of VAT.

Foreign actors working in Thailand were once subject to a 30% tax, which was reduced to 10% two years ago, and now to zero for a period of five years.

However the Thai cabinet did not approve other incentives which have been under review by the Ministry of Tourism and Sports and Ministry of Investment and Finance since 2008. These included a 100% VAT cash refund and a tax credit of 20-25%.

Thailand has historically been the most popular location in South-East Asia for runaway shoots, due to its low costs, experienced crews and strong infrastructure. Films to shoot in Thailand recently include Universal Pictures’ Scorpion King 3 and Legendary Pictures’ The Hangover 2.

However, the country is facing growing competition, and the bulk of its foreign shoots are lower-budget films, documentaries and TV commercials. The local production services industry has been calling for a raft of incentives to make the country more competitive and attract bigger-budget shoots.

Tax rebates seem to be an obvious option, but local observers say the Thai Finance Ministry is concerned about the administrative burden of tracking tax receipts from local vendors including hotels, restaurants and equipment suppliers. It’s thought that rebates may be back on the agenda following further consultation..  

Thailand’s Department of Tourism announced in January that the country earned $60m (baht1.8bn) from foreign shoots in 2010, doubling the $30m (baht900m) earned the previous year.