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Thailand: Revised Excise Tax Law

(Oct. 12, 2017) On September 16, 2017, a revised excise tax came into force in Thailand that increases taxes on seven products, including alcoholic beverages, playing cards, sugary drinks, and tobacco. Speculation in advance was that prices would go up substantially. For that reason, the commerce and finance ministries moved to limit hoarding of the affected items in advance of the effective date of the change. Penalties for hoarders include seven years of imprisonment and/or a fine of up to 140,000 baht (about US$4,222). (Phusadee Arunmas, Crackdown on Alcohol, Cigarette Hoarders, BANGKOK POST (Sept. 14, 2017).)

Under the new provisions, excise rates will be calculated in a different manner, based on retail prices and volume, rather than according to the present system that relies on factory prices. (Id.) These rules were enacted in the Excise Tax Act B.E. 2560 (2017), published in the Royal Thai Government Gazette on March 20, 2017, in advance of the September effective date. The Act consolidates seven separate excise duty regulations and applies international standards for excise taxes.  (Angela Koo, Excise Tax Act B.E. 2560 Gazetted, IBFD TAX RESEARCH PLATFORM (IBFD) online subscription database (Mar. 28, 2017) (requires log on, then search by country).

Thailand imposes excise taxes regardless of whether the product was made domestically or imported. (Thailand: Country Survey, ¶ 9.5 Excise Duty, IBFD (last visited Sept. 14, 2017).) There is an additional customs duty imposed on imported cigarettes, with a rate of 5% for products from countries in the Association of Southeast Asian Nations Free Trade Area Agreement, to which Thailand is a party, and 60% in other cases. (Thailand: Tobacco Taxation, World Health Organization website (last visited Sept. 14, 2017).)

The excise taxes, often called sin taxes, are used to fund government programs with social benefits. (Arunmas, supra.) For example, annually 2% of the alcohol and cigarette taxes, without a monetary limit, is sent to the state-operated public television; 1.5%, up to 2 billion baht (about US$60.3 million), is given to the Thai Health Promotion Foundation; and 2%, also up to 2 billion baht, benefits the National Sports Development Fund. In addition, the Cabinet has announced it will establish an Elderly Fund, which will receive 2% of the sales, up to 4 billion baht a year. (Id.)