FRIDAY, March 01, 2024

Cheap, low-quality goods flooding Thai market due to duty exemption: private sector

Cheap, low-quality goods flooding Thai market due to duty exemption: private sector

The Finance Ministry is convening this week to review the exemption of import duties for goods valued under 1,500 baht.

Lavaron Sangsnit, Finance Ministry permanent secretary, said on Monday that the ministry was also planning to meet the Customs and Excise departments and relevant agencies to discuss “tax-free” for goods purchased and brought into the country.

Currently, goods not exceeding 1,500 baht in value, including packaging, transportation and insurance costs, are exempt from duties and 7% value-added tax (VAT).

However, the private sector has raised concerns about the influx of tax-free imported goods, notably from China, undercutting domestic products and posing challenges for local retailers.

Most of these imports, while cheaper, are of inferior quality and lack proper certification, raising issues of intellectual property infringement.

The objective of the upcoming meeting is to evaluate whether adjustments to duty rates or revocation of the exemption are necessary to address these issues and align with current market conditions.

“We will study the issue from every dimension, including non-postal logistics, transportation services, false declaration of the value of goods to avoid taxes as well as free zones or duty-free areas established for the benefit of customs for industrial, commercial or other economic activities that contribute to the country’s economy.

This covers the impact on entrepreneurs, manufacturers, traders, and workers affected by the exemption of taxes on imported goods," Lavaron said.

Establishing a minimum customs valuation for exempted goods is in line with regional economic cooperation frameworks, promoting market opening and trade facilitation.

However, global discussions on the appropriate minimum valuation level underscore the importance of finding a balance to maximise trade facilitation, particularly in the burgeoning e-commerce sector.

Thailand’s minimum customs valuation for tax exemption, set at 1,500 baht since 2018, marks an increase from the 1987 threshold of 500 baht. While exempting duties benefits imports, it poses challenges for value-added tax collection, as duty rates serve as the basis for calculating VAT.

This has sparked debates over the fairness of tax imposed on locally produced goods, which are subject to VAT from the first baht.