Thailand’s new VAT regulations on imported goods, implemented to ensure fair trade and protect local producers, are a significant development for the country’s economy.
Thailand’s Customs Department is set to implement a new policy, starting from May 2024, that will charge value-added tax (VAT) on all imported goods sent through postal services, regardless of their value.
According to Permanent Secretary for Finance Lavaron Sangsnit, imported goods sent via postal services are exempt from import duties and VAT if the importer declares each item’s value, insurance and freight (CIF) to be less than 1,500 baht per unit.
The influx of inexpensive goods from China into the market has created an unfair advantage, as Thai producers are burdened with taxes. This is the driving force behind the introduction of the new VAT regulations.
To ensure fair trade, the Finance Ministry plans to charge VAT on imported goods sent through postal services regardless of value while maintaining exemption from import duties.
According to Lavaron, the Customs Department will issue a notice to levy this tax, which could be done more quickly than amending the tax code.
Each country sets its threshold based on economic conditions. In Thailand, the threshold was 1,000 baht until 2018, after which it was adjusted to 1,500 baht per item. A source from the Ministry of Finance, who requested anonymity, said the threshold for duty-free goods does not include prohibited items.
More than 30 million parcels are imported into Thailand annually, with more than half of them being goods with a CIF value of less than 1,500 baht. Online platforms selling goods from China import vast quantities of low-cost goods in containers containing tens of thousands of items.
This poses a significant challenge and is time-consuming if each box needs to be opened for tax assessment, as the Ministry of Finance proposed.
Customs officials are considering appropriate methods of taxing low-value goods.
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