Excise tax rule targets gaps in declared liquor and beer prices

Thailand’s Excise Department is set to fully enforce new rules for calculating the “modal recommended retail price” from May 15, 2026, in a major step to tighten scrutiny of excise tax bases, particularly for liquor and beer products.

The move is part of the excise tax system that has used the “recommended retail price” as the basis for tax calculation since 2017. The department says the new approach is intended to ensure that tax assessments better reflect prices actually seen in the market.

The latest step follows field inspections carried out from April 1-10, when excise officials checked actual selling prices and compared them with prices declared by operators in the tax system.

The checks focused in particular on products where there appeared to be a gap between the price stated in documents and the real selling price in the market.

The 2017 shift in excise tax

The current system began with the Excise Tax Act B.E. 2560, which came into force on September 16, 2017. It marked a major restructuring of excise tax collection, replacing the previous reference to ex-factory prices, or cost, insurance and freight (CIF) prices for imported goods, with the recommended retail price.

Under the system, operators are required to notify the Excise Department of their recommended retail prices. These are then used as the tax base for both value-based and quantity-based rates, known as a mixed tax system.

The system applies to several product categories, including liquor, beer, beverages and tobacco.

However, after the system was introduced, the department found that some operators had declared retail prices lower than actual market prices, creating a tax gap and causing the state to lose revenue.

Modal price system aims to close tax gap

In 2018, the Excise Department began developing a “modal price” system to assess whether declared recommended retail prices were appropriate.

The department worked with retailers and major operators to collect actual selling-price data and calculate a modal benchmark price for each product category. In simple terms, the modal price refers to the price most commonly found in the market.

Under the approach, the price declared by an operator must not be more than 5% lower than the modal benchmark price. If it falls below that level, the department can ask for an explanation or make an additional tax assessment.

Temporary promotional campaigns, including discounts, exchanges, giveaways and special offers, are not counted under this benchmark.

The key principle of the system is to use real market selling prices to reflect the tax base more accurately. This is aimed at preventing artificially low price declarations and reducing tax inequality among operators.

Tighter checks before full enforcement

Industry sources said excise officials had already begun inspecting shops and business premises in several areas between April 1 and 10.

The inspections covered retail shops, wholesalers and online sales channels, particularly for products subject to excise tax. Officials checked actual selling prices and compared them with the prices declared to the department.

Under the new rules taking effect on May 15, the Excise Department will give greater weight to modal price data when assessing the tax base. If a declared price differs significantly from the real market price, officials will be able to use the modal price data immediately for tax assessment.

Community beer and soda producers watch cost impact

Community beer and community soda producers are among the groups watching the impact closely.

The new system requires recommended retail prices to be assessed against the market price structure of similar product categories, even though smaller producers may face higher production costs than large-scale operators.

Operators in this segment said community-made products, especially craft beer, have cost structures that differ from industrial producers. These include raw materials, production capacity and packaging costs.

They warned that using the modal price as a central benchmark could make it more difficult for smaller operators to set recommended retail prices.

The Excise Department, however, views the new rules as a way to make the tax system better reflect real market behaviour and reduce the long-running problem of under-declared prices across several industries.