Thailand To Tackle Tax Avoidance On Imported Cars

Thailand’s Government has confirmed that it is planning to change the way excise tax is calculated on imported vehicles as part of a wider plan to modernize Thailand’s excise tax system and increase tax revenues.

Somchai Poolsawasdi, Director General of the Excise Department, said recently that the upcoming changes are designed to stop importers from using understated cost, insurance, and freight (CIF) valuations to reduce excise tax payable.

Under the proposed new excise tax system, excise tax rates would be cut, but the tax would be based on the retail price of the vehicle, rather that its CIF valuation.

Plans to change the basis of excise taxes to retail prices, instead of ex-factory prices, were announced by the Excise Department last year as an addition to the military-led Government’s tax reform plans. The new excise tax calculation methodology is intended to improve transparency (as ex-factory prices could be understated by manufacturers), and bring Thailand’s excise taxes in line with global standards. The Government says that the amendment would have no effect on consumers, but will increase excise tax revenues by around THB6bn (USD178m) annually.

The new excise tax bill was approved by the Cabinet last month but must be endorsed by the Legislative Assembly before it can become law.