Excise chief to get pricing authority

The new excise tax law will authorise the director-general of the Excise Department to determine recommended retail prices for use as a the base for excise tax calculation in the event of disputes.

If the recommended retail price is not in line with the market mechanism or the real situation, the Excise Department will have the power to determine the price, which will be based on retail prices in the market or import prices, said director-general Somchai Poolsavasdi.

The revised excise tax, which will come into effect 180 days after it is published in the Royal Gazette, will change the base for the excise tax computations to the recommended retail prices from the existing ex-factory prices and costs, insurance and freight (CIF) values.

The Excise Department is pinning hopes on recommended retail prices to create more fairness for all manufacturers and importers after it found that some of them were exploiting the ex-factory and CIF values to understate their tax bills.

Mr Somchai said retail prices available at markets where trade occurs in huge volume, such as modern trade, will be used as the reference for the recommended retail prices.

According to the law, the recommended retail prices will be considered from production and management costs and standard profit, but not lower than the final retail prices for goods sold to end-users in normal market conditions.

To facilitate the new base for excise tax computation, the Excise Department will draft 80 organic laws, Mr Somchai said.

The tax-collecting agency is also seeking approval from the Public Sector Development Commission Office to incorporate an office tasked with analysing the recommended retail prices.

The unit would be under the existing office after the approval, Mr Somchai said.

He reiterated that the tax rates set by the new excise tax law for products are the ceiling, not the effective rates, and the tax burden of manufacturers will not change significantly. The Excise Department will mitigate the effects by lowering current rates to comply with a tax neutrality concept.

Apart from shifting towards the recommended retail price, the new law will allow the department to calculate tax based on both volume and value to stay neutral in cases where the recommended retail prices of products are lower than CIF or ex-factoring prices once the new law comes into force.

The current law permits the Excise Department to charge the tax based on either value or volume.