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ResourcesCorporate and Tax AdvisoryThailand Tax LawChanges to Excise Tax Calculation in Thailand

Changes to Excise Tax Calculation in Thailand

Transcript of the above video:

Of particular interest to many of our corporate clients, small businesses, in fact here in Thailand, it's going to be the issue associated with some recent announcements that have come up with respect to excise tax in the calculation thereof here in the Kingdom. The quote directly from a Bangkok Post article which was published on the 21st of August 2017, the title of the article is “Far-reaching changes afoot for excise tax.”

To quote directly from this article, “Organic laws concerning the new excise tax rates which apply to all products subject to excise duties except for alcohol and cigarettes will top the cabinet's agenda this week. The cabinet would seek to approve new duties for alcohol and cigarettes shortly before the new excise tax regime comes into force on September 16th.” The move is aimed at preventing people from ported products to reap windfall profits set and Informed sources of Finance Ministry, the excise department insists that the new excise tax structure will not add a significant burden to operators. The source said the new excise tax will mark a radical change and how taxes are computed for products spanning vehicles and alcohol cigarettes. Now that Pollock drains batteries crystal glass and air conditioners, the system replaces the existing ex-factory prices and cost insurance and freight values with “selected retail prices.”

A couple of things of note in this that I think are worth noting is first of all, they're doing this in such a way as to keep people from trying to hoard things to incur sort of windfalls as a result of you know having hoarded things before the change came into effect and then sort of selling them on the open market after the change comes into effect. I'm not saying to be alarmist about this particularly but if there's that big of a difference then in the possible pricing. I mean it seems strange to be alarmed about that if there's not going to be a change in the tax structure. But that being said, I don't think it's wise to go ahead and run out and buy up all the toilet paper or cigarettes in the world simply based on, you know, this article.

The other thing that I found interesting is they're replacing and calculation the ex-factory prices and cost insurance and freight values with “the suggested retail prices” as of yet I'm unaware. And I've actually thought we've talked to our corporate services team. We're made up of attorneys and accountants.

With respect to what are these suggested retail price is going to be whose coming up with the suggested retail prices. Is this a government mandated thing or is it based on like a survey of the open market? Adequately learn more about this. We'll go ahead and probably post another update on this on this channel but for now, it seems like it's profitable to expect a slide and I think it'll be slide. I don't think it's going to be an insane increase in taxes because I simply don't think. First of all, the Thai government officials although I would argue sometimes are a little less than connected with the day-to-day aspects of doing business in Thailand. And in a macro sense, they're actually pretty women, for lack of a better term. They're pretty appreciate and how they look at things so I don't think they're going to just overnight put a 35 percent hike on cigarettes or 35 percent tax hike on an alcohol or something I find that very unlikely. But I think it's fairly safe to assume we're going to see it not an insignificant bump in taxes on an excise level in the upcoming probably 60 days.

[Since the publication of the original video there have been further developments on this issue, to read more please see: Excise Tax]