Thai government plans 7% VAT on imported goods from May

Under the leadership of Prime Minister Srettha Thavisin, the Thai government is set to introduce a 7% value-added tax (VAT) on imported goods valued at 1 baht and above, commencing in May.

Presently, goods priced under 1,500 baht (US$40) per parcel and imported into Thailand are exempt from VAT. Deputy Finance Minister Julapun Amornvivat disclosed these intentions following a recent Cabinet meeting, stating that the new VAT imposition aims to foster equity for Thai small businesses.

“The implementation of VAT aims to ensure parity for small businesses in Thailand, as both foreign and domestic entities will be subject to taxes at identical rates.”

Additionally, the move is anticipated to bolster government tax revenue.

Endorsing the new taxation initiative is Thanawat Malabuppha, honorary president and advisor of the Thai e-Commerce Association, who believes it will bolster the competitiveness of local small and medium-sized enterprises (SMEs). He pointed out that inexpensive Chinese goods flooding the Thai market through e-commerce platforms like Lazada, Shopee, and TikTok Shop have intensified price competition, placing local SMEs at a disadvantage.

Paul Srivorakul, CEO of aCommerce, a prominent e-commerce enabler, concurs with Thanawat’s perspective.

“The introduction of this new regulation ensures that all goods, irrespective of their origin, adhere to the same tax standards, leveling the playing field for local products and domestic businesses.”

Paul also acknowledged potential complications in customs procedures and the possibility of slowing down the import of legitimate goods but stressed the significant benefits to local SMEs and the Thai economy.

Sangchai Theerakulwanich, President of the Federation of Thai SMEs, hailed the move as a stride towards fairer trade.

“Low-cost imports, primarily ordered online, have resulted in local sellers unable to compete, leading to closures.”

Sangchai also urged enhanced state surveillance of border trade amidst reports of smuggling goods into Thailand to evade customs duties, as reported by Bangkok Post.

Highlighting the necessity for enhanced protection against the influx of inexpensive Chinese products to sustain their competitiveness, the Federation of Thai Industries (FTI) emphasized this concern. FTI Chairman Kriengkrai Thiennukul revealed that the import of Chinese products has prompted some local manufacturers, especially SMEs, to curtail production by 50%.