How businesses have responded to new excise regime
THE NEW Excise Act BE 2560 came into effect on September 16 bringing with it many changes. One of the most important changes was probably the implementation of the Suggested Retail Price (SRP) as an excise tax base for both manufactured and imported products.
So what happened over the past few months and how did the business community respond to the new Act?
Directly after the implementation of the new Act, feedback from the business community was on the whole not great. Some complained that it took too much time to get their SRPs approved by the Excise Department and that this delayed the customs clearance procedure, leading to shipments getting stuck at the port. This problem occurred for example with shipments that weren’t subject for sale (eg non-commercial shipments or samples) as the data needed for generating the cost breakdown of the SRPs weren’t readily available. Some also talked of the extra administrative burden of registering multiple SRPs for products that are essentially the same but have multiple models or stock keeping units (SKUs).
However, over the past few months some of these issues have been ironed out. These improvements were made through collaboration between the Excise Department, Customs and the business community. It now appears that companies can register their SRPs faster and clear their goods in an appropriate time.
Does this mean that all is good and companies can be rest assured that there won’t be any excise issues in the future?
Not necessarily. Historically the Excise Department has not been very active in carrying out excise audits. However, this may change as the new Excise Act offers incentives to officers. There is a new reward system which allows officers to receive rewards of up to 20 per cent of the excise tax fine they collect (capped at Bt5 million per case). This new incentive may mean we see excise officers become more active.
Excise officers (of the Investigation, Prevention and Suppression Bureau) may perform excise audits by either request documents for inspection or by perform field audits at companies’ premises. The audits can go back for two to five years from the excise tax filing.
As the Act is still relatively new the Excise Department will probably not start these audits until next year. And although it’s not yet clear what the Excise’s key focus will be or what audit approach they’ll use, companies are recommended to start preparing as it is probably only a matter of time before they’ll be audited. Preparations should include pro-actively gathering support for the cost breakdown of the submitted SRPs and training staff on the new excise tax practices (eg regarding monthly reporting requirements) and record keeping requirements.
Whether the excise audits will be “aggressive” or carried out similarly to post-clearance Customs audits and investigations remains to be seen.
However, given the new reward scheme for Excise officers, it is expected that there will be a definite increase in excise audits in the near future.
Now most of the initial operational issues have been resolved and SRPs are now being registered in a timely manner, it’s time to look at preparing for potential challenges in future audits and checking compliance with the new legislation.
You don’t want to get caught off guard and face with clawback excise and fines or deal with negative business disruptions.
Contributed by TANARAT PERMPOONSAP, Manager of Customs & International Trade, PwC Thailand
