Tax exemption ceiling for wine raised
A new excise law will increase the tax exemption ceiling for wine to thousands of baht from 600 baht with the goal of reducing the tax burden of local wine makers, says the Excise Department chief.
Overseas wine producers do not expect to gain from the new waiver, as their retail prices are higher than those of local wine, said Somchai Poolsavasdi, director-general of the department.
Under the new excise law, which will be enforced from Sept 16, suggested retail price will replace the existing ex-factory prices and cost, insurance and freight (CIF) values as a base for excise tax computation. The change is aimed at creating a fairer system for makers and importers after some businesses were found to exploit these values to understate their tax bills.
He said alcohol is still subject to a levy on alcohol content plus a surcharge on price under the new law.
There are six or seven major local wine makers, including Siam Winery.
Organic laws concerning the new excise tax rates, which will apply to all 21 categories of products subject to excise duties except for alcohol, cigarettes and playing cards, have already won the cabinet’s approval and the rates will be announced in coming days.
An informed source at the Finance Ministry recently said ready-to-drink coffee and tea beverages will lose their excise duty-free privileges after the new excise law comes into effect. These soft drinks will be levied a 10% tax on their suggested retail price, plus a sugary drink tax rate that depends on the sugar content of the beverage.
The sugary drink tax will see bottles and cans of soft drinks with sugar content of 0-6 milligrammes as tax exempt, while 6-8mg will be subject to a 10-satang tax. Those with 8-10mg will be taxed 30 satang, 10-14mg will be taxed 50 satang, and more than 14mg will be levied one baht.
Sugary drink tax rates will be gradually raised every two years over a six-year period to allow sweetened soft drink makers to reduce sugar in their beverages as a move to improve public health.
Deputy Finance Minister Wisudhi Srisuphan said the new excise duty rates for alcohol, cigarettes and playing cards will seek cabinet approval on either Sept 5 or 12 to prevent people from stockpiling them to reap a windfall.
Kitipong Urapeepatanapong, chairman of Baker McKenzie in Bangkok, raised concerns that the new law may cause small makers to lose their competitive edge as larger producers can lower their operating costs to bring down the retail price and pay less tax, accordingly.
For example, large makers typically have lower costs in importing wine than smaller ones, he said.
Thanakorn Kuptajit, president of the Thai Alcoholic Beverage Business Association, said the new excise law will radically change the alcohol tax structure as high alcohol content will be charged at a higher rate, so makers must adjust by reducing the alcohol volume in drinks.