Finance Ministry Moves to Introduce 7% VAT on Inexpensive Imported Items

[Polaky]

Great!!, ordered my maserati last week, now have to pay tax !!😀

[Arkady]

11 hours ago, Sophon said:

 

Actually, the standard VAT rate in Thailand is already 10%, and has been for decades. The rate has been "temporarily" reduced to 7%, a reduction which will expire on 30th September 2024 unless again extended by the government. So the government wouldn't have to raise the rate, they can just let the current reduction in the rate expire in September.

 

This is correct.  VAT was introduced at 10% soon after the 1997-8 Tom Yam Kung crisis at the suggestion of the IMF.  It replaced a complicated sales tax but was more straightforward and was supposed to raise more revenue.  After the IMF conditions were met, which was long before Thaksin came to power and claimed he was the one that got Thailand out of the IMF programme, the government decided to give the hard pressed public some respite from the unpopular new tax and temporarily reduced it to 7%.  Successive governments have been too terrified of voters to put it back up to 10%.  So they have decreed more temporary waivers every 2 years. 

 

It is pretty certain that with such poor economic growth and low tax revenue it is only a matter of time before the government just allows the 10% VAT to come back by default.  It is such an efficient and hard to avoid tax that, once done, it is unlikely that they will pause at 7% for very long.  They see European countries charging 20% plus. 

[Yellowtail]

The left loves regressive taxes. 

[Startmeup]

Get nailed on changes to income taxes now another 7% slug on foreign products on top. Fabulous 

[JensenZ]

3 hours ago, Yellowtail said:

Correct. The actual cost generally is: Cost + Freight + Tax 1 + Tax 2 = Landed Cost

(Cost + Freight) X Duty  =  Tax 1

(Cost + Freight + Tax 1) X VAT = Tax 2

 

 

But there still will be no duty on anything imported under 1500 baht, so only about 100 baht tax at the limit. It won't change the cost of anything over 1500, as they are technically liable for duty and tax from 1501 baht.

[Dogmatix]

21 hours ago, Startmeup said:

Get nailed on changes to income taxes now another 7% slug on foreign products on top. Fabulous 

 

I think it's the thin end of the wedge.  VAT will go up to 10% sooner or later and I saw some official quoted saying they are looking at a unified import duty rate for low cost items.  I think that is the reason they have not imposed duty as well at this stage.  It is too complicated to impose duty when you have to go through the complex HS codes to figure out what the tax rate is which could be anywhere between 5% and 40%.  They will force the big vendor sites to charge 7% VAT and pay it to them.  When that's up and running, they may decide on uniform 10% duty for all items up 1,500 or $40.  Then with VAT up to 10%, there will be an add on of 20%, just like Brits pay in VAT. I think we will see that within 5 years.  7% is not so painful on cheap goods but 20% is more so.

[bristolgeoff]

just another tax for everyone.I buy a fifty baht item at a shop made in china maybe it will cost a bit more for everyone.Just like another comment how can we tax the people again  like the world over.

   No different to the west you are born pay tax day 1,you die  tax again when u are in the ground nothing changes

[Yellowtail]

3 hours ago, bristolgeoff said:

just another tax for everyone.I buy a fifty baht item at a shop made in china maybe it will cost a bit more for everyone.Just like another comment how can we tax the people again  like the world over.

   No different to the west you are born pay tax day 1,you die  tax again when u are in the ground nothing changes

 

Where did you find a shop made in China?