New excise rates round the corner

The new excise tax rates for vehicles, nonalcohol beverages, batteries and crystal glass will be announced before Sept 16 when the new law comes into effect, says an official at the Excise Department.

These products are not popular items for hoarding, so the announcement of rates shortly before their implementation should not have any impact, said Nutthakorn Utensute, director of the Excise Department’s Planning Bureau.

But the new tax rates for 15 other product categories and four types of services will be announced on Sept 16, the date the rates come into force, to prevent hoarding, said Mr Nutthakorn.

With the implementation of the new excise tax base just around the corner, automakers and consumer goods manufacturers are concerned about the tax burden increase, which will cause them to raise retail prices as purchasing power remains weak. The industry has therefore asked the department to reveal the tax rates before bringing them into effect.

The Excise Department hopes the suggested retail prices, which will replace the existing ex-factory prices and cost, insurance and freight (CIF) values, will create a fairer system for manufacturers and importers after was it found that some businesses have been exploiting the ex-factory and CIF values to understate their tax bills.

The act also authorises the directorgeneral of the Excise Department to determine suggested retail prices for use as a base for excise tax calculation in the event of disputes. If the suggested retail price is not in line with the market price, the department will have the power to determine it, which will be based on retail market prices or import prices.

The department is drafting 80 organic laws to facilitate the new base for excise tax computation.

He said that the new excise tax for vehicles will either be higher or lower than the current levies but the Excise Department will cut rates in an effort to maintain tax neutrality.

Changing the excise tax computation base to suggested retail prices, in principle, will not cause consumers to shoulder higher tax payments as the department will reduce tax rates to keep the overall tax burden at its current level, said Mr Nutthakorn.

The tax burden will increase significantly when the new tax base is enforced for those operators who are currently understating their CIF, but whether manufacturers will pass on the cost to consumers depends on them, he said.