Govt may allow VAT exemption only on online imports under THB1,000

The move stemmed from a request of the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB), which was seeking measures to counter cheap imports from overseas that are flooding Thai markets, and ensure fairness to Thai manufacturers, the source said.

The source revealed that during preliminary talks this week, the ministry concluded that it could not scrap the VAT exemption on overseas products altogether as it would violate free trade agreements. However, it could adjust the price cap to reflect the current market situation, which would be in line with measures implemented by other countries.

During the talks, Deputy Commerce Minister Julapun Amornvivat​​ said adjusting the cap would affect millions of items currently eligible for a VAT break, and could pose a challenge for officials in thoroughly checking all the products.

One approach that could fix this problem would be to allow platform operators to collect the tax and submit to the government, but this would require an efficient measure to prevent false listing of product prices to evade tax, he added.

Julapun tasked related agencies to come up with procedures and measures to facilitate the new VAT collection system.

The source said the ministry was also working with the Food and Drug Administration, the Industry Ministry, and the Customs Department in drafting criteria for food, drug, and industrial products to be implemented in the free trade zone in a bid to protect Thai entrepreneurs.

Pawut Pongwittayapanu, managing director and founder of e-commerce platform TARAD.com, said reducing the cap for VAT exemption of imported products from 1,500 to 1,000 baht would only marginally fix the problem, as most of the foreign products flooding Thai markets were already priced under 1,000 baht.

He suggested that the government study Indonesia’s measures for preventing influx of overseas products and protecting its own entrepreneurs.