As the public awaits proposed a consultation draft of changes to the Thai Revenue Code imposing certain taxes on the import of low-value goods (LVGs), Thai Customs has announced temporary measures that make nearly all goods imported into Thailand subject to import duty and value-added tax (VAT), regardless of their value. The temporary measures are effective from 5 July 2024 through end of the calendar year.
Background
Historically, LVGs have been defined under the Customs Notification (CN) No. 191/2561 (2018) as goods valued at not more than 1,500 Thai baht (THB 1,500). In this respect, the import of LVG into Thailand is specifically exempted from duty under Part 4 (Type 12) of the Customs Tariff Decree B.E. 2530 (1987).
Similarly, imports of LVG are exempted from the 7% VAT under the Revenue Code and from excise tax (in the case of excisable goods) under the Excise Act B.E.2560, in line with the provisions of CN191 and Part 4 (Type 12), mentioned above.
With these exemptions, the import purchase of LVG from overseas suppliers (commonly through e-commerce platforms) is not subject to VAT and excise tax (in the case of excisable goods), whereas the purchase of LVG from local suppliers is subject to these taxes. This discrepancy puts domestic goods and local business operators at a disadvantage to overseas goods and suppliers.
To level the playing field and ensure fairness for domestic products and local business operators, the Ministry of Finance announced on 29 April 2024 that the Revenue Department will make necessary amendments to the Revenue Code to collect VAT on LVG valued at more than THB 1 up to THB 1,500. On 4 June 2024, the Thai Cabinet approved the imposition of VAT on imported LVG on values exceeding THB 1.
Temporary measure
Because the drafting and public consultation of proposed changes to the Revenue Code, including changes to the collection mechanism, is expected to take time, Thai Customs has been tasked with imposing and collecting import VAT on LVG imports in the interim.
To that end, the following notifications were issued on 19 June 2024 as temporary measures effective from 5 July 2024 to 31 December 2024:
- Customs Notification No. 116/2567 (2024)
- This Notification redefines the value threshold for LVG eligible for duty exemption under Part 4 (Type 12) to imported goods not exceeding THB 1.
- With this change, the import VAT exemption applies only to LVG valued not exceeding THB 1. For goods valued over THB 1 but not exceeding THB 1,500 and imported within the abovementioned period, import VAT shall be levied and collected by Thai Customs.
- Ministry of Finance Notification in relation to duty reduction and exemption under Section 12 of the Customs Tariff Decree B.E. 2530 (1987)
- This Notification grants an import duty exemption on imported goods with cost, insurance and freight (CIF) value over THB 1 to THB 1,500 (per consignee) from 5 July through 31 December 2024.
With these interim measures in place, the import of any excisable goods with CIF value over THB 1 but not exceeding THB 1,500 (per consignee) would also be subject to excise tax.
To implement these interim measures, the Customs Department released its Customs Notification No. 129/2567 (2024) on 4 July 2024, effective from 5 July 2024 to 31 December 2024.
Subject to future amendments to the Revenue Code on the VAT reporting and collection mechanism for imported LVG, these interim measures shall be in force until 31 December 2024.
The graphic below illustrates the key import declaration requirements and tax collection mechanisms for the import of LVG under the interim measures.
With this interim measure, foreign sellers of LVG who offer their goods for sale to the Thai market via e-commerce or other online channels will need to make the necessary arrangement with their third-party logistics or courier service providers to be the importer of record (IOR) party and remit the VAT payment on these imports to help ensure seamless delivery of the goods to customers in Thailand. In the case of delivery via postal service, the burden of VAT payment rests with the recipient/consignee party in Thailand.
For additional information concerning this Alert, please contact: EY Corporate Services Limited, Tax Services, Thailand
Ernst & Young LLP (United States), Thailand Desk, New York
Ernst & Young LLP (United States), ASEAN Tax Desk, New York
Ernst & Young LLP (United States), Asia Pacific Business Group, New York
Ernst & Young LLP (United States), Asia Pacific Business Group, Chicago
|
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert. |
