Phuket will continue to welcome tourists despite Covid surge

Phuket reopened its borders to international visitors on July 1, welcoming fully vaccinated tourists as part of the “Phuket Sandbox” initiative. But a rise in Covid cases in the Thai destination over past week is already putting the scheme – seen as a potential model for other tourism-reliant destinations to follow – at risk.

At present, there are no restrictions on vaccinated travellers arriving in Phuket. The region has rules that differ to the remainder of Thailand, where international tourism remains closed and Covid-19 cases are spiralling. Vaccinated travellers wishing to explore farther afield than Phuket have the option of spending 14 days in the island region, before being cleared to visit other destinations across the country.

A sign mandating the use of face masks at Patong Beach in Phuket, Thailand. Courtesy Bloomberg

However, the Thai destination reported 125 new Covid-19 cases in the week ending July 27. The Thai government had previously said that if Phuket recorded 90 weekly cases, it would consider a temporary suspension of the sandbox programme.

Public schools and shopping malls in Phuket have already been closed, while gatherings of more than 100 people have been banned.

We’re entering a tightening mode and reducing local activities on the island

Thaneth Tantipiriyakij,
president, Tourism Council of Phuket

The majority of new cases in Phuket were recorded among local residents, rather than tourists, and all high-risk contacts on the island have been isolated to prevent further spread, according to officials. About 70 per cent of Phuket’s residents are fully vaccinated against the virus, compared to about 5 per cent nationwide. Only 26 vaccinated visitors out of the more than 11,800 that have arrived since July 1 have tested positive for the virus.

“We’re entering a tightening mode and reducing local activities on the island, but we have several circuit breakers in place before there’s a suspension to the reopening programme,” said Thaneth Tantipiriyakij, president of the Tourism Council of Phuket. “With the surge in infections, our focus right now is to assess the situation day-by-day and week-by-week.”

Besides the 90 weekly-case limit, other criteria for the suspension of the Phuket sandbox include the detection of infections in all three districts on the island or more than six sub-districts, the identification of more than three clusters, the uncontrollable spread of new variants, and an occupancy rate of hospital beds that exceeds 80 per cent of hospital capacity.

Any setback to Phuket’s reopening would damage Thailand’s plan to expand the sandbox model to other islands and beach resorts in the country. On July 15, an additional three islands in the Surat Thani province, Koh Samui, Koh Tao and Koh Phangan, also reopened to tourists.

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks.

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.

8. Pillar 2 implementation

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

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