UPDATE 1-Thai cabinet approves more measures to spur domestic tourism

* Increases subsidies for hotels, flights

* Value-added tax kept at 7% for another year (Adds detail, valued-added tax)

BANGKOK, Aug 25 (Reuters) – Thailand’s cabinet on Tuesday approved more stimulus measures to support domestic tourism to recoup some of the losses from the absence of global travel after the coronavirus pandemic shut borders, a government official said.

The government will increase benefits contained in an earlier package including subsidies for hotels and flights, deputy government spokeswoman Rachada Dhnadirek told a briefing.

A 40% discount will cover 10 hotel nights for each traveller, up from 5 nights earlier, while a subsidy on flights will double to 2,000 baht ($63.53), she said.

The tourism-reliant country has had no foreign tourists since April due to a travel ban.

Thailand expects to receive 8 million foreign tourists this year, down 80% from last year’s record 39.8 million visitors whose spending accounted for 11.4% of GDP.

The cabinet also approved keeping valued-added tax at 7% for another year to September next year to help reduce living costs and lift business confidence, Finance Minister Predee Daochai said in a statement. The VAT will be reviewed yearly.

“That will help economic recovery after the COVID-19 outbreak situation eases,” he said.

Southeast Asia’s second-largest economy shrank at its deepest annual pace in the second quarter since the 1998 Asian crisis due to the outbreak. ($1 = 31.48 baht) (Reporting by Orathai Sriring and Kitiphong Thaichareon Editing by Ed Davies)