Thai government plans 7% VAT on imported goods from May

[webfact]

 

The Thai government, under the directive of Prime Minister Srettha Thavisin, is preparing to implement a 7% value-added tax (VAT) on imported goods valued at 1 baht and above, starting in May.

 

Currently, goods sold for less than 1,500 baht (US$40) per parcel and imported into Thailand are exempt from VAT. Deputy Finance Minister Julapun Amornvivat announced these plans after yesterday’s Cabinet meeting, asserting the new VAT collection is a move towards fairness for Thai small businesses.

 

“VAT collection is to ensure fairness for small businesses in Thailand, as both foreign and domestic operators will have to pay taxes at the same rate.”

The move is also expected to boost government tax revenue.

The new tax measure is endorsed by Thanawat Malabuppha, honorary president and advisor of the Thai e-Commerce Association, who believes it will enhance the competitiveness of local small and medium-sized enterprises (SMEs). He noted that low-priced Chinese goods, sold on e-commerce platforms like Lazada, Shopee, and TikTok Shop, have flooded the Thai market, causing intense price competition and disadvantaging local SMEs.

 

Paul Srivorakul, chief executive of aCommerce, a leading e-commerce enabler, agrees with Thanawat’s view.

 

“The new rule ensures that all goods, regardless of origin, are subject to the same tax standards, levelling the playing field for local products and domestic businesses.”

 

Paul also acknowledged that while this might complicate customs procedures and potentially slow down the import of legitimate goods, the benefits to local SMEs and the Thai economy are more significant.

 

Sangchai Theerakulwanich, President of the Federation of Thai SMEs, welcomed the move as a step towards fairer trade.

“Cheap imports are usually ordered online, causing local sellers who cannot compete to shut down.”

 

Sangchai also called for better state monitoring of border trade in light of reports of smuggling goods into Thailand to avoid customs duties, reported Bangkok Post.

 

The Federation of Thai Industries (FTI) has underscored the need for better protection against the influx of cheap Chinese products to maintain their competitiveness. Chairman of the FTI, Kriengkrai Thiennukul, revealed that the import of Chinese products has led some local manufacturers, especially SMEs, to slash production by 50%.

 

by Alex Morgan

Picture courtesy of Bangkok Post

 

Source: The Thaiger 2024-04-03

 

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[bob smith]

I give up!

 

bob.

[worgeordie]

16 minutes ago, webfact said:

7% value-added tax (VAT) on imported goods valued at 1 baht and above,

I would say the Government is getting desperate ,they need cash from anywhere

to get money for the wallet scheme , it's going to make deliveries longer ,and who

is going to collect the tax ...

 

regards Worgeordie 

[Banana7]

It's silly to tax goods of small value because the cost and effort to do so is above the value gained. It probably costs 50-100 baht just to calculate and collect the tax, and far more if the tax is not prepaid. So for a 100b item, 7b is tax but costs 50b to collect, so the government loses 43b.

 

[eisfeld]

I never understood why imported goods would have lower taxes than locally produced. With low value items the margins are usually razor thin so any percent of tax has an outsized impact on overall profitability. It made more sense to produce something outside Thailand and then ship it over than produce in Thailand. Who came up with that idea?

[cmike]

40 minutes ago, worgeordie said:

I would say the Government is getting desperate ,they need cash from anywhere

to get money for the wallet scheme , it's going to make deliveries longer ,and who

is going to collect the tax ...

 

regards Worgeordie 

 

The post office collects the tax.

 

I received a note yesterday telling me that I have received a parcel and I need to pay 250 Baht tax and 240 Baht import duty at the main post office before I can get the goods

 

 

[connda]

1 hour ago, webfact said:

“VAT collection is to ensure fairness for small businesses in Thailand, as both foreign and domestic operators will have to pay taxes at the same rate.”

The move is also expected to boost government tax revenue.

This is about hoovering more wealth from those who can least afford to pay.  "Fairness for small businesses?"  Bunk.

[connda]

56 minutes ago, bob smith said:

I give up!

 

bob.

Time to leave Thailand again bob!

[bob smith]

1 minute ago, connda said:

Time to leave Thailand again bob!

nah, i'm staying!

 

got front row tickets to the freak show! 😄 

 

bob.

 

[Bert got kinky]

Will they tax the full cost (inc. freight) or just the value of the goods.

 

7% value-added tax (VAT) on imported goods valued at 1 baht and above

So if something is valued at 1 Baht, how are you supposed to pay the tax, are they also going to introduce 1 Satang coins or will they round it up to the lowest value coin available (25 Satang), which would mean that you are paying 25%?

 

Edited April 3 by Bert got kinky

[Bert got kinky]

6 minutes ago, cmike said:

 

The post office collects the tax.

 

I received a note yesterday telling me that I have received a parcel and I need to pay 250 Baht tax and 240 Baht import duty at the main post office before I can get the goods

 

 

 

Only on goods shipped through the post office, most small goods are now shipped through private courier companies.

 

[John Drake]

Prayuth was better.

[cooked]

But they reduced tax on imported alcohol didn't they? Not 100% sure I like this new government.

[digbeth]

It was unfair that shops in China can set up store fronts in Lazada or Shopee and ship 'cheap' <1500.- baht stuff into Thailand tax free and with possibly cheaper freight than any local thai based stores can do... this is not even considering that Thai business has to pay business taxes on top

 

but levying this on the platforms like Lazada and Shopee means people will move on to other platforms that don't have presence in Thailand like Alibaba, 

[dinsdale]

Reduce import and excise tax and introduce a VAT. Mmmm? Seems like kindergarten was back in for this one. Shhhhhhhh! No one will notice. 

[digbeth]

1 hour ago, dinsdale said:

Reduce import and excise tax and introduce a VAT. Mmmm? Seems like kindergarten was back in for this one. Shhhhhhhh! No one will notice. 

VAT has always been here they just try to close the loophole that allows personal import of small value stuff to be vat-exempt trying to stop the deluge of chinese stuff

 

[Liverpool Lou]

3 hours ago, Banana7 said:

So for a 100b item, 7b is tax but costs 50b to collect, so the government loses 43b.

 

Where has the "B50-100 cost for collection of the VAT on each individual item" that you quote been detailed?  Perhaps on a governmental scale the cost would only be B1 in which case the government's "profit" would be substantial?

[Liverpool Lou]

3 hours ago, eisfeld said:

I never understood why imported goods would have lower taxes than locally produced.

In relation to this OP, they don't have lower tax rates, there is/was just a level below which no tax was imposed.

[Liverpool Lou]

2 hours ago, cmike said:

3 hours ago, worgeordie said:

I would say the Government is getting desperate ,they need cash from anywhere

to get money for the wallet scheme , it's going to make deliveries longer ,and who

is going to collect the tax ...

 

regards Worgeordie 

Expand  

 

The post office collects the tax.

...or the courier...or the Customs department.

[rexpotter]

The concept sounds benevolent, but how will they really enforce this?

[rexpotter]

Additional taxes are never meant to benefit anyone who doesn't work for the goverment.

[Liverpool Lou]

2 hours ago, Bert got kinky said:

So if something is valued at 1 Baht, how are you supposed to pay the tax,

Who on earth is going to be importing goods valued at B1?  The reference to B1 was simply to explain that, currently, imports valued at less than B1500 (B1-1,500)  are duty-free.  

[John Drake]

5 minutes ago, rexpotter said:

The concept sounds benevolent, but how will they really enforce this?

 

Just hold everything via post at Lak Si, require you to make a trip there that'll cost you maybe a 1000 baht, and have you pay your 70 baht tax. 

[Liverpool Lou]

2 minutes ago, John Drake said:

 

Just hold everything via post at Lak Si, require you to make a trip there that'll cost you maybe a 1000 baht, and have you pay your 70 baht tax. 

Shipments using Thailand Post are held at the recipient's local delivery office pending duty payment, not Lak Si. 

[khunPer]

They need money for the 10,000 baht scheme...

[Bert got kinky]

7 minutes ago, Liverpool Lou said:

Who on earth is going to be importing goods valued at B1?  The reference to B1 was simply to explain that, currently, imports valued at less than B1500 (B1-1,500)  are duty-free.  

 

It was a hypothetical question, is that beyond your understanding?

 

Just to explain that to you:

A hypothetical question is one based on supposition, not facts. They are typically used to elicit opinions and beliefs about imagined situations or conditions that don't exist.

 

[tomazbodner]

3 hours ago, webfact said:

“The new rule ensures that all goods, regardless of origin, are subject to the same tax standards, levelling the playing field for local products and domestic businesses.”

Right. Remove the import duty especially on luxury items and cars, then.

[brianthainess]

2 hours ago, cooked said:

But they reduced tax on imported alcohol didn't they? Not 100% sure I like this new government.

I'm 100% sure I don't. 

[lopburi3]

3 hours ago, Bert got kinky said:

are they also going to introduce 1 Satang coins

They are here - but they sell for a lot more than a Satang.

[brianthainess]

4 hours ago, webfact said:

who believes it will enhance the competitiveness of local small and medium-sized enterprises (SMEs). He noted that low-priced Chinese goods, sold on e-commerce platforms like Lazada, Shopee, and TikTok Shop, have flooded the Thai market, causing intense price competition and disadvantaging local SMEs.

I can understand that in a way, BUT as I have said before every time this story is regurgitated Thousands of goods that are made in China are simply not made in Thailand, especially some electrical items, from remotes to eclectic bikes and beyond. Plastic goods, bedroom slippers, dash cams, also UBS leads........etc. etc.