Thai Customs Dept. to enforce tax collection on luxury cars

[americaninbangkok]

"The Customs Department has instructed its officials to step up the enforcement..."

Yes, but did they vow?!

No, I think they prefer to pledge after mulling it over.

So... vowing to pledge to committing to considering to enforcing... ?

Or... pledging to vow... ?

Vow MUST be in there somehow... this is Thailand!

[Tomtomtom69]

Customs officials to act tough on luxury car importers

BANGKOK: -- The Customs Department is to strictly enforce collection of import duties on luxury cars after importers tended to declare lower value of the vehicles to avoid higher tax payment.

Customs Department director-general Rakop Srisupa-att said tougher measure is necessary as it becomes a common practice for importers as the baht weakens to declare a value of the vehicles, less than their actual prices, drastically reducing the amount of tax importers have to pay.

The current political impasse and the weaker baht have in effect sent the import tax higher and in turn diminished the number of imported cars, he said.

He explained that a decline of two baht in the exchange rate of the baht would cost the importer of a 3 million baht car an additional 700,000 Baht.

Mr Rakop explained that the amount of tax a luxury car importer has to pay is a combination of import tax, excise tax and 320 percent value added tax on the declared price.

Source: http://englishnews.thaipbs.or.th/customs-officials-act-tough-luxury-car-importers/

-- Thai PBS 2014-04-23

The 320% value added tax is of course a punitive tax measure designed to protect the local Thai car manufacturing industry. Other countries like Australia have removed import barriers and allowed cheap imported cars to flood the market, in the end the local car industry was destroyed - currently 90% of cars sold in Australia are imported, up from 50% or less a decade or two ago and after 2017 100% will be imported. Of course, there are numerous other factors involved too (such as high wages, high value of the local currency, low vehicle production that has gone down from nearly 400,000 units in 2005 to only 200,000 in 2012, wrong models being produced for current demand, small export market etc.), but it's clear that the removal of import tariffs was one major factor, in fact, removal of these kinds of tariffs seemed to be a priority for Australian governments over the years and it's not just in the case of cars.

I still smicker at how the Australian officials involved in the drafting and implementation of the Australia-Thailand FTA or TAFTA,which entered into force in 2005 I believe, were either too dumb or oblivious to realise that the terms of the agreement were clearly in Thailand's favour from the outset, when it comes to motor vehicles. This is because Thailand's "removal" of tariffs applied to imported Australian vehicles only applied to the removal of a then small tariff that may have applied specifically to Australian motor vehicles, but the main up to 320% tax applied to ALL foreign imported motor vehicles was NOT removed and still hasn't been, nor is there any plan for it to be removed as far as I'm aware except MAYBE for vehicles produced in other ASEAN countries such as Malaysia and Indonesia, which mostly manufacture models not locally manufactured in Thailand as part of the upcoming AEC FTA (this could be working already because nowadays I see a ton of new Thai registered Protons on the roads here, which wasn't the case just 2-3 years ago when there practically none on the roads at all, except visiting Malaysians driving their own vehicles temporarily, mainly in southern Thailand). In fact, a few years ago I don't think there was even a single Proton showroom in Thailand but now they are sprouting up everywhere.

That was the killer here, because if the tariff just went down from say 340% to 320%, that is hardly a gain for Australia at all. Thailand however made a big gain, because when the lousy 5% or whatever tariff on Thai motor vehicles imported into Australia ended, Thai cars became even cheaper and apart from the luxury vehicles tax applied to all motor vehicles above a certain price sold in Australia, irrespective of where they're manufactured, there are now NO taxes or tariffs applied to Thai imported vehicles into Australia at all. And it gets even better for Thai manufacturers, because none of the models produced here are expensive enough to be subject to the luxury vehicle tax in Australia.

Of course Australia was probably never really interested in having Thailand become a major importer of Australian produced vehicles anyway, when the Thai industry was about to become ever more competitive, but then again Australia and Thailand produced nearly the same number of vehicles in 2000 (about 350,000 units), by 2005 this number had increased to 394,000 in Australia's case and about a million or so in Thailand's case. After 2005, Australia saw a big decline in manufacturing output, while Thailand saw a massive gain, in fact a doubling of output by 2012.

[SOTIRIOS]

...translation...forget the last 10 years.....and the 'high rollers' that we nabbed last year......from now on......

[rickirs]

The step up the enforcement of policy on the value declarations of imported luxury cars, in order to prevent tax evasion, is a face saving effort at best. The laws have so many loopholes in them that I doubt anyone buying an imported luxory car is paying the full yaxes on it. Auto dealers can get tax waivers for "special promotion events." Government officials, police, and military may be able to get waivers as well for "official" business use. Cars can be shipped w/o steering wheel, battery, tires, etc. that qualifies them as unassembled autos not subject to the full fair of taxes that a completed auto would have. Cargo container manifests are mislabled to conceal autos inside. Some used parts are put on an auto to quaify it as a used auto for lower taxes.

The best way to have better enforcement is not to need it. Thailand might better consider some specialized trade agreements with nations like UK, Japan, Korea, US, etc. that would keep import taxes at a government-to-government level, rather than at customer/dealer-to-government level. For example, equal offset taxes for equal value but dissimilar commodities being exported and imported. Say Japan places a bevy of taxes on Thailand rice while Thailand places a bevy of taxes on Japan autos. Where the sum of taxes between Japan import of Thailand rice and export of Japan autos are equal, inurement of taxes on both sides would be offset. Where there is no offset, payment of taxes is made at the government level, recouped by taxing the manufacturer/distributor.

[Burl Ives]

Why is it that in the age of WTO and free trade agreements that Europe allows the Thai Govt to impose such inequal Customs and Exise duties on cars and wine, do they not know what's going on?

Why don't they retaliate?

I wrote to the WTO and they said it's not our problem!

Each indiviual country has to take their own stand.

Funnily enough if you look at complaints to WTO Thailand is one of the most vociferous complainants!

Time for us to get together and raise Merry Hell with the EU!!

[RAZZELL]

Why do so many expats feel the need to endlessly compare prices of cars with the west?

I notice nobody complains about the cheap price of pick ups or lots of other things here.

Very curious indeed.

Err...I would've thought it's pretty relevant to this thread...as the UK is where most of these right-hand drive Bentleys, Lambos, Ferraris and other "cheap" supercars come.

RAZZ

Edited April 23, 2014 by RAZZELL

[Thai at Heart]

Customs officials to act tough on luxury car importers

BANGKOK: -- The Customs Department is to strictly enforce collection of import duties on luxury cars after importers tended to declare lower value of the vehicles to avoid higher tax payment.

Customs Department director-general Rakop Srisupa-att said tougher measure is necessary as it becomes a common practice for importers as the baht weakens to declare a value of the vehicles, less than their actual prices, drastically reducing the amount of tax importers have to pay.

The current political impasse and the weaker baht have in effect sent the import tax higher and in turn diminished the number of imported cars, he said.

He explained that a decline of two baht in the exchange rate of the baht would cost the importer of a 3 million baht car an additional 700,000 Baht.

Mr Rakop explained that the amount of tax a luxury car importer has to pay is a combination of import tax, excise tax and 320 percent value added tax on the declared price.

Source: http://englishnews.thaipbs.or.th/customs-officials-act-tough-luxury-car-importers/

-- Thai PBS 2014-04-23

But how does he know they are undervaluing things?

[Woodsie888]

Why do so many expats feel the need to endlessly compare prices of cars with the west?

I notice nobody complains about the cheap price of pick ups or lots of other things here.

Very curious indeed.

Err...I would've thought it's pretty relevant to this thread...as the UK is where most of these right-hand drive Bentleys, Lambos, Ferraris and other "cheap" supercars come.

RAZZ

But why compare prices and complain incessantly about it?

High taxes on cars have been a fact of life here for years.

Pretty much all expats know how much cars cost back home, so why the need to list comparisons all the time?

Err...I think it is irrelevant to the discussion that was raised.

BTW. Bentleys, Ferraris and other 'cheap' super cars are not going to be the main focus, rather the 5,000 MB's and 3,000 Alphard's etc imported annually will receive that.

[steelepulse]

So I guess the bottom line means more tea money for the customs officials to under value.

[tomyummer]

House....car....house....car? Same price? Utterly ridiculous.

The government should start with a property tax and alleviate on the car taxes. You can them really hit the uber rich families squatting on hectares of unused land.

[Tomtomtom69]

Why is it that in the age of WTO and free trade agreements that Europe allows the Thai Govt to impose such inequal Customs and Exise duties on cars and wine, do they not know what's going on?

Why don't they retaliate?

I wrote to the WTO and they said it's not our problem!

Each indiviual country has to take their own stand.

Funnily enough if you look at complaints to WTO Thailand is one of the most vociferous complainants!

Time for us to get together and raise Merry Hell with the EU!!

Thailand actually dares to complain?! haha, I'd like to see evidence of that! Normally there's a mai pen rai attitude here, don't ask questions or criticize, especially not in the presence of foreigners.

As mentioned in my other reply, clearly the reason for high duties being applied to cars imported into Thailand is to protect the local industry. That way skilled Thais have jobs and economic growth is supported. The Thai motor vehicle manufacturing industry is one of the largest manufacturing operations in the country right now and opening it up completely by removing all tariffs on foreign imported motor vehicles would be seen as dangerous by the government and it's stakeholders.

As for wine, there is little reason for high excise taxes. Sure, there are some local manufacturers but they are not being protected per se as wine here is not promoted as an export item nor is it a big industry here - all wine in Thailand is overpriced including the local stuff coming out of Pak Chong and Phetchabun. Thai wine is not only unknown internationally, it's also unknown locally. Right now I can't name a single local producer of the top of my head and in fact the strawberry and lychee wine from Mae Sai seems to be more well known amongst my Thai peers and friends than any local wine made from grapes.

Without doing a search, I am not aware if there is currently any sort of Thailand-Europe FTA in place yet. If yes, then it would seem strange that tariffs on wine (a big export out of such countries as France, Spain and Italy) is still subject to high tariffs, but do look at the specifics of the agreement. It could be that tariffs will be gradually phased out over a period of a few years, not straight away. In the case of the Thailand-Australia FTA, this was the case too. In the absence of an FTA between Thailand and Europe (I have heard of negotiations having taken place, but please confirm if there is an agreement currently in force or not), then what Thailand imposes in terms of tariffs isn't a problem as there's no agreement to remove these tariffs. That's what the FTA is for - so prior to the phasing in of the FTA both sides of an economic partnership can do pretty much what they want.

Edited April 28, 2014 by Tomtomtom69