Beginning January next year, Thailand will impose taxes on all foreign goods sold through online platforms, thereby ending the current exemption on low-value imports priced under 1500 baht (US$46.30).
According to Panthong Loikulnan, the Director-General of the Customs Department, the objective of this move is to level the competition for local businesses and increase government revenue. The current situation gives foreign goods an edge over Thai businesses, putting Small and Medium-sized Enterprises (SMEs) at a disadvantage.
The newly instated system will subject all imported goods, regardless of their value, to customs duties and Value-Added Tax (VAT) as required by the law. This change supersedes the existing tariff exemption, which will be phased out by the end of this year.
Goods priced below 1500 baht currently represent over 30 billion baht ($927 million) in annual imports. Loikulnan estimates that imposing an average 10 per cent duty could generate at least an additional 3 billion baht ($92.7 million) in government revenue each year.
The proposed system will primarily rely on data verification from online platforms and random inspections to ensure compliance. Furthermore, Thailand’s customs department is currently in discussions with major e-commerce operators to directly link their sales and import data.
Loikulnan believes that this reform will help establish a fair market for domestic retailers who are already paying taxes and are particularly impacted by the wave of low-cost imported products.
In his opinion, delaying the implementation of such a system would put Thailand at a disadvantage since many other countries are grappling with the same issue: domestic sellers pay taxes, while foreign goods are imported tax-free.
For the long term, Loikulnan suggests introducing a “lump-sum tax”, which implies a flat rate of 20 to 30 per cent per imported package. This would simplify the system and increase efficiency. However, he acknowledges that such a change would necessitate legislative amendments and would take time to implement.
What is the objective of Thailand’s new tax system?
The aim is to level the playing field for local businesses and increase government revenue.
How will the new system work?
All imported goods, regardless of their value, will be subject to customs duties and VAT. The system will rely on data verification from online platforms and random inspections to ensure compliance.
What is the proposed “lump-sum tax”?
The “lump-sum tax” refers to a flat rate of 20 to 30 per cent per imported package, suggested as a long-term solution to simplify the system and increase efficiency.
