Millions Lost In Tax Revenue Over Imported Cars: Thailand

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Millions lost in tax revenue over imported cars

The Nation

BANGKOK: -- A Department of Special Investigation (DSI) investigation of car imports found that in January alone, 166 new cars had been wrongly registered as having been bought more than 18 months ago in order to lower their value before being smuggled into the country.

It also found that 300 Mercedes Benz vehicles had been brought into the country for the "grey market", in which cars are imported by unauthorised distributors/persons and are sold at cheaper than market prices.

Other than declaring luxurious cars as being worth a lot less than they really are, smugglers have also resorted to providing false information on imported autoparts in order to pay low custom duties.

The government has been losing out on millions of baht worth of tax revenue every year, especially since luxury cars are usually taxed 187 to 328 per cent, DSI chief Tarit Pengdith said.

Thailand has about 30 companies selling cars in the "grey market", and officials need to inspect suspect income tax payments and check if the value of imported goods is being declared falsely, he said.

He added that any officials found involved would be reported to the National AntiCorruption Commission and urged consumers to not buy cars from the "grey market" because they could face charges of conspiracy.

-- The Nation 2012-03-16

[softgeorge]

Wasn't there a similar story a couple of weeks ago about the children of the Hi So sect studying abroad buying luxury cars, holding on to them for 12 months then and sending them home to daddy avoiding the tax.

Edited March 15, 2012 by softgeorge

[PattayaPhom]

At upto 328% tax...is it any wonder

[TAWP]

"State is upset it cannot steal more from people using outrages tax-rates or that some are trying to avoid having someone steal from them."

[givenall]

Surprise surprise,

If I as a frang already now this, then all people running DSI are either morons, or under the take

[bobl]

Stupid policies = more people working ways round them

Sensible policies = no point/gain in gaming the system

It's really that simple.

Perhaps the hub of crackdowns should crackdown on stupid policies...

[AGareth2]

So what!

Billions are lost through corruption

[RedNIvar]

The only people who can afford these cars are the wealthy. If this is what they are doing with vehicle tax, I wonder the loop holes they are jumping through in paying their income taxes.

I hope the Thai's will realize the one's that are ripping them off, are those who are well to do and able to bribe their way out of everything.

IMHO

[chooka]

CLS-Class Coupé (Merc)

CLS 350 BlueEFFICIENCY

Manufacturer's List Price

including GST $139,855.00

Recommended maximum dealer delivery¹

including GST $2,692.31

Luxury Car Tax (LCT) $25,524.39

VIC Total Registration² $713.20

VIC Registration $263.30

VIC CTP² $0.00

VIC Stamp Duty $8,410.00

Drive Away Price

Base model featured only. $177,194.90 (5,670,236 Bht)

(Based on Victoria, Australia prices which vary from state to state depending on local gov stamp duty taxes)

A nieghbour of ours has one of these that his daughter used when studying in Melbourne Australia he then imported the vehicle.

So assuming that he paid the tax at say the 328% (example only) the vehicle in the end would have cost him $581,282 (AUD) or 18,598,282 Baht.

I see a lot of luxury imported vehicles driving around Chiangmai and the carpark at our son's school is a motoring buffs Disneyland. How on earth can Thai's (A "3rd World" country) afford such luxury items.

We hear stories of corporations like Toyota and the like considering relocating to nieghbouring countries due to the increase in the minimum wage and the floods and if they do then the pickups that the average rice farmer relies on will have to be imported and as such be subjected to the import taxes. I guess Thailand will revert to the bullock and cart and bicycle.

Edited March 16, 2012 by chooka

[jonclark]

Anyone who buys one of these cars is not only rich, but stupid. Seriously A Merc, BMW,Aston Marin here costs three times what it would in the UK. You would have to be a serious jackass to waste your money in such a way.

[Cheops]

"State is upset it cannot steal more from people using outrages tax-rates or that some are trying to avoid having someone steal from them."

That sums it up quite nicely! The car-import tax is way too high. It's just stealing from the people indeed.

I drove a MX5 in my home-country:

Price of a new MX5 in the USA: about 800-900 kbaht.

Price of a new MX5 in Holland: about 1.3 Mbaht (in Holland cars are considered quite expensive already)

Price of a new MX5 in Thailand: about 2.6 Mbaht (about double the Holland price and triple the USA price)

They do this for what? Protect people from not buying a local made car?

If they just lowered these taxes to half of they are now, much much more people will buy imported.

I think the government will even collect more revenue if they did this, since much more people will buy the car of their dreams.

[noitom]

Wasn't there a similar story a couple of weeks ago about the children of the Hi So sect studying abroad buying luxury cars, holding on to them for 12 months then and sending them home to daddy avoiding the tax.

Yes there was a story a few weeks ago exactly as you describe. It was tedious and boring then and even worse now as a second run.

[Cheops]

Anyone who buys one of these cars is not only rich, but stupid. Seriously A Merc, BMW,Aston Marin here costs three times what it would in the UK. You would have to be a serious jackass to waste your money in such a way.

Yes, BUT if you are living here you really have no choice when you like that kind of cars is it! It's either pay the high price or move to another country.

But IF you can afford an Aston Martin (not Marin, I think you are clearly not a car-lover:)), you can assure that you don't need to worry about a penny (or baht in this case) more or less. Even in any of your home-country ordinary people cannot afford an Aston Martin!

[tfbpa]

Anyone who buys one of these cars is not only rich, but stupid. Seriously A Merc, BMW,Aston Marin here costs three times what it would in the UK. You would have to be a serious jackass to waste your money in such a way.

And that is exactly the reason why the grey market exists....

You know you can buy a new Mini for 900.000 Baht on the grey market instead of the 2.2 Million Baht through regular channels?

You know you can buy a new Merc C class for 1.5 Million Baht on the grey market instead of the 2.2 Million Baht through regular channels?

These people are not stupid, they work around the system to get "cheap" cars, which would otherwise cost a whole lot more.

That is not to say it is the correct thing to do, just saying...

[rockderk]

I've been aware of this scam for over a decade. So has every government official in the land. Now who on earth might be buying these illicit vehicles? Well golly gee I just don't know.

[oilreg]

well, at least we know by now, that insane tax on luxury cars is used to buy luxury iPads & luxury iPhones for government officials

Edited March 16, 2012 by oilreg

[givenall]

Anyone who buys one of these cars is not only rich, but stupid. Seriously A Merc, BMW,Aston Marin here costs three times what it would in the UK. You would have to be a serious jackass to waste your money in such a way.

And unable to enjoy driving them since have to be careful all the time in this ridicules traffic with all the selfish and aggressive drivers

[steelepulse]

Some folks at the DSI didn't get paid!

[belg]

nice to see how easy it is to do business with thailand or in thailand... why the super mega expensive import taxes? to protect their own economy ? should other people to the same with thai products ? 187 to 328 % of taxes... that is why daddy in law claims his new lexus costed more than our house... 555

[crobe]

Anyone who buys one of these cars is not only rich, but stupid. Seriously A Merc, BMW,Aston Marin here costs three times what it would in the UK. You would have to be a serious jackass to waste your money in such a way.

The majority who own these cars are not stupid, merely totally corrupt.

The majority of members of the Ferrari club of Thailand are Royal Thai Police - go figure.

If the DSi wants to do something useful (it never does), instead of just spouting hot air, then it should investigate how government servants such as police can afford 25-30m baht supercars

Crobe

[easybullet3]

"State is upset it cannot steal more from people using outrages tax-rates or that some are trying to avoid having someone steal from them."

agree

and surely the customs officials should know the price of a car. so if the price-tag doesn't match the price, then they know something dodgy is going on.

just give the Thai customs a copy of Parkers new and Used car guides and the problem will be solved!!

http://www.parkers.co.uk/cars/prices/used

[overherebc]

Anyone who buys one of these cars is not only rich, but stupid. Seriously A Merc, BMW,Aston Marin here costs three times what it would in the UK. You would have to be a serious jackass to waste your money in such a way.

I agree with you, I would never spend that amount of money on a car. I would also never buy a new car, talking UK experience, pay your money, drive around the block and it's worth half what you paid it one hour ago. On the other hand it's a choice and down to the individual. We think they're stupid, they think we're stupid.

[Miami Bob]

"State is upset it cannot steal more from people using outrages tax-rates or that some are trying to avoid having someone steal from them."

That sums it up quite nicely! The car-import tax is way too high. It's just stealing from the people indeed.

I drove a MX5 in my home-country:

Price of a new MX5 in the USA: about 800-900 kbaht.

Price of a new MX5 in Holland: about 1.3 Mbaht (in Holland cars are considered quite expensive already)

Price of a new MX5 in Thailand: about 2.6 Mbaht (about double the Holland price and triple the USA price)

They do this for what? Protect people from not buying a local made car?

If they just lowered these taxes to half of they are now, much much more people will buy imported.

I think the government will even collect more revenue if they did this, since much more people will buy the car of their dreams.

A couple years ago I went to the BMW international website and searched what a new BMW 7 series with V8 costs in different countries and converted them all into US dollar. Here are the results:

USA - $86,000

Germany/Italy - $136,000

Holland - $170,000

Thailand - $425,000 !!

I did this when the exchange rate was 35 Baht to a US dollar and it is 30 now so now the 7 series would be about $484,000 USD

I also looked at the Thailand BMW site and found the 6 cyl. 7 series was 8.5 million Baht, V8 - 14.5 million and V12 - 18.5 million. So you pay and extra 6 million Baht to get the V8 instead of the 6 cyl. That's because of the horsepower tax Thailand has in addition to import tax.

I would to have a mini S but it's 3 times the USA cost so I had to settle for a Thai made Ford Fiesta S...handles real nice for a low prices car.

[submaniac]

The only way that these cars could even be allowed is with the aid of Thai customs and other officials at the land transportation bureau. There have been enough threads on the motoring forum about importation about cars being seized and sold at auction, that there is no way any car can even enter the country (nevermind the emissions testing and blue book registration) without a government official being involved. If they really want to collect the tax, all that is required is to keep an eye on their own.

[ozyjon]

A few years ago i built a custom chopper, in Sydney (factory built) not backyard job, great looking machine, a year later i got my retirement visa to live in Thailand, i sent my belongings in 2 large crates to Thailand (first mistake) and then i tried to import my bike here as well, it is brand new, never ridden for displaying in custom bike and car shows, but i wanted to have it here in Thailand, went to the customs department in Bangkok, went through all the offices in all the floors, a young worker who spoke English translated the rules and regulations, ended up at Suvarnabhumi airport (import-export) offices next to the airport, i had a friend of mine do all this with me, he is a lawyer who speaks Thai and English very well,,, i built this chopper with all brand new parts for about $5000.00 AUD, it's what i do,,, after all the calculations were done by all the relevant departments, export from Australia,, import from Thailand,, 300% tax paid on the value calculated by the Thai customs department (note that) it was calculated that my Thai customs etc bill would be around $20,000.00 AUD, the bike is still in Sydney wrapped in cling wrap gathering dust,, People out there, read this and learn from us that have been there,, it's not worth it in any way form or manner, i was later told about the gray importers although i have decided not to persue the matter any further,,NOT WORTH IT AT ALL

[stevehaigh]

"State is upset it cannot steal more from people using outrages tax-rates or that some are trying to avoid having someone steal from them."

the government hates competition, the world over

[xavierr]

It is gross new-rich mentality to buy a Mercedes Benz or a BMW. Worst investment possible IMO.

Why not buy a cheaper car and invest the rest of the money in uplifting those less fortunate in one's own country?

[3SoiDogNight]

The 328% car tax breeds corruption. It inflates the cost of an average car to the price of a luxury car.

Supporting the local economy is great but the cars made here in Thailand are small & crappy little econoboxes. I'd like to have a Holden Monaro, Commodore SS or Ford Falcon which are not luxury cars back in Australia. They're left-side drive cars that is the closest to what I drive back in the US - Lincoln Town Car.

Not everyone wants a Vios, Altus or Camry. It would be nice to be able to locate your car at a parking lot as every car seems to be a Vios, Altus or Camry.

I understand that Thailand wants to protect their car manufacturing industry but a more sane tax would be about 7%. It cost a TON of money to have a car shipped from abroad so it's very few people that would go through the trouble of importing. They'd probably would get more revenue at a 7% tax.

[BigJohnnyBKK]

That sums it up quite nicely! The car-import tax is way too high. It's just stealing from the people indeed.

...

They do this for what? Protect people from not buying a local made car?

If they just lowered these taxes to half of they are now, much much more people will buy imported.

I think the government will even collect more revenue if they did this, since much more people will buy the car of their dreams.

Exactly, the justification is that it encourages car makers to build locally. And that's succeeded enormously, as far as I can tell to the enormous benefit of Thailand's industrial development.

Owning an expensive car isn't a basic human right, it's up to the government to set the regulations as it sees fit. And of course to ensure that they're enforced fairly.

Australia did the same for decades, the difference there that they were just supporting a very inefficient and expensive manufacturing industry that really didn't benefit the local economy as much as the damage done by the high duties IMO.

[chooka]

The 328% car tax breeds corruption. It inflates the cost of an average car to the price of a luxury car.

Supporting the local economy is great but the cars made here in Thailand are small & crappy little econoboxes. I'd like to have a Holden Monaro, Commodore SS or Ford Falcon which are not luxury cars back in Australia. They're left-side drive cars that is the closest to what I drive back in the US - Lincoln Town Car.

Not everyone wants a Vios, Altus or Camry. It would be nice to be able to locate your car at a parking lot as every car seems to be a Vios, Altus or Camry.

I understand that Thailand wants to protect their car manufacturing industry but a more sane tax would be about 7%. It cost a TON of money to have a car shipped from abroad so it's very few people that would go through the trouble of importing. They'd probably would get more revenue at a 7% tax.

Australian cars are right side drive the same as in Thailand and are driven on the left hand side of the road