For those of us doing business in Thailand understanding how custom tariffs are applied is a necessity. Thailand’s custom tariff rules and regulations are designed and administered with two key objectives in mind. As a revenue source and to help local industry.
-Thailand has a history of maintaining high custom tariff rates. In 1994 there began a concerted effort to reduce tariffs overall. However, during the financial crisis of 1997, this course was slowed in order to maintain revenue to run the government. The net result of this effort shows us that tariffs that had historically ranged from thirty to sixty percent have been reduced down to one to 45 percent for most imported goods. That said, it is important to keep in mind that goods deemed to be luxury items are subject to an additional excise tax.
ASEAN and the WTO
– Thailand is a member of both the World Trade Organization (WTO) and the Association of Southeast Asian Nations or (ASEAN). Membership in these two organizations provides Thailand businesses significantly lower customs tariffs between member countries.
Other Taxes and Tariffs
– VAT or Value Added Tax is currently at 7%. It is levied on both the sale of goods and services. There are also specific business taxes that are collected on many businesses that don’t pay VAT. A good example of this type of tax would be for banking, real estate sales or other financial services.
Alternative Tax and tariff schemes
– There are several Thai governmental plans or schemes designed to promote business activity and provide employment opportunities to Thai citizenry. One of the most popular schemes is designed around Free Trade Zones, or FTA’s. These FTA’s allow businesses operating within a FTA to import goods, add value to the goods, and export the same items without incurring a taxable presence in Thailand. Also associated with this strategy are programs promoted by the Thailand board of Investment or BOI, as well as general bonded warehouses and manufacturing bonded warehouses.
Eagles Air & Sea have significant experience working with clients who want to take advantage of these programs. While there can be significant tax savings, there are also administrative requirements that require support from individual professionals familiar with the government’s requirements.
– Thailand’s customs procedures are similar to most other developed countries. Documentation requirements include the usual stuff such as bill of lading, a packing list and the invoice. Importers can file all of the needed forms ahead of the arrival of the actual goods. This can speed up the process considerably. To avoid any unexpected delays, it is always a good idea to work closely with your freight forwarder when importing good into Thailand.