Excise Tax Law Reforms in Thailand Dr Nathanan

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Excise Tax Law Reforms in Thailand Dr. Nathanan Junprateepchai

Excise Tax Law Reforms in Thailand Dr. Nathanan Junprateepchai

Agenda § § § Excise Tax Law Reform Initiative The Master Plan & Proposed

Agenda § § § Excise Tax Law Reform Initiative The Master Plan & Proposed Reform Thailand – “the Work in Progress”

Basic information § Roles of excise: Revenue collection § Collecting percentage: Petroleum, Automobile, Tobacco,

Basic information § Roles of excise: Revenue collection § Collecting percentage: Petroleum, Automobile, Tobacco, and Alcohol generating > 75% of excise tax revenue § Tax Base: specific or ad-valorem rate, which one is higher § Price: ex-factory price (domestic products) and CIF + Import duties (Imported products)

Excise Tax Law Reform Initiative § The excise tax law reform was initiated in

Excise Tax Law Reform Initiative § The excise tax law reform was initiated in 2010 due to the following concerns; Ø Complexity of the excise tax law Ø Regional economic integration of ASEAN communities

Master Plan Principles toward the Reform § § § Simplicity Fairness Transparency Administrative Efficiency

Master Plan Principles toward the Reform § § § Simplicity Fairness Transparency Administrative Efficiency Modernization

Master Plan Phase 1 Excise tax law reform Phase 2 Excise tax regulatory reform

Master Plan Phase 1 Excise tax law reform Phase 2 Excise tax regulatory reform

Master Plan Phase 1 Excise tax law reform Problem Findings legislative structure Excise Act

Master Plan Phase 1 Excise tax law reform Problem Findings legislative structure Excise Act Excise Tariff Act Excise tax Calculation Method Tobacco Act Liquor Act Playing Card Act Excise Tax Base

Problem Finding Complex Legislative Structure Excise Act B. E. 2527 Excise Tariff Act B.

Problem Finding Complex Legislative Structure Excise Act B. E. 2527 Excise Tariff Act B. E. 2527 Tobacco Act B. E. 2509 Liquor Act B. E. 2493 Playing Card Act B. E. 2486 Complexity and inefficiency

Proposed Reform Simplify Legislative Structure Excise Act B. E. 2527 Excise Tariff Act B.

Proposed Reform Simplify Legislative Structure Excise Act B. E. 2527 Excise Tariff Act B. E. 2527 Tobacco Act B. E. 2509 Liquor Act B. E. 2493 Playing Card Act B. E. 2486 Excise Tax Code

Proposed Reform New Excise Tax Code Structure Title 1 General provision Title 2 Sin

Proposed Reform New Excise Tax Code Structure Title 1 General provision Title 2 Sin goods and services Title 3 Goods and services with government concession Title 4 Luxury goods and services Title 5 Goods and service relating to environment Title 6 Other goods and services

Problem Findings Excise tax base Ad VS. Specific valorem § Problem finding – Specific

Problem Findings Excise tax base Ad VS. Specific valorem § Problem finding – Specific – unfairness between rich and poor – Ad valorem – administrative inefficiency

Proposed Reform Excise tax base Specific Ad valorem Mix Similar to EU countries

Proposed Reform Excise tax base Specific Ad valorem Mix Similar to EU countries

Problem Findings Ad valorem base § Ex-factory price – price actually sold from the

Problem Findings Ad valorem base § Ex-factory price – price actually sold from the factory § Problem finding – no clear definition of ex-factory price – tax loophole on “ex-factory price” allocating among group companies

Proposed Reform Ad valorem base Proposed Reform § Adopt multiple tax bases in excise

Proposed Reform Ad valorem base Proposed Reform § Adopt multiple tax bases in excise tax code such as retail sale price for cars and wholesale price for fuel (USA)

Problem Findings Ad valorem base § CIF – Cost of goods + Insurance +

Problem Findings Ad valorem base § CIF – Cost of goods + Insurance + Freight + Custom § Problem finding – low cost manipulation by multinational companies – revenue loss due to zero custom duty under AEC and FTA agreement

Proposed Reform Ad valorem base Proposed Reform § Adopt “custom price” under GATT valuation

Proposed Reform Ad valorem base Proposed Reform § Adopt “custom price” under GATT valuation instead of “CIF” in order to avoid low cost manipulating by MNCs

Problem Findings Excise tax calculation method Inclusive tax Domestic producer: (Factory price + excise

Problem Findings Excise tax calculation method Inclusive tax Domestic producer: (Factory price + excise tax + applicable tax ) x excise tax rate Importer: (CIF + excise tax + custom duty + applicable tax ) x excise tax rate § Problem finding – complex and confusing calculation method for taxpayers

Proposed Reform Excise tax calculation method Domestic producer: (Factory price) x excise tax rate

Proposed Reform Excise tax calculation method Domestic producer: (Factory price) x excise tax rate Exclusive tax Importer: (CIF + custom duty) x excise tax rate § Proposed Reform – adopt exclusive tax for more transparency and simplicity to taxpayers

Problem Findings Phase 2 Excise tax regulatory reform -Royal decree, -Ministerial regulation -Notification of

Problem Findings Phase 2 Excise tax regulatory reform -Royal decree, -Ministerial regulation -Notification of the Ministry of Finance -Notification of the Excise Department -Notification of the Director-General of Excise Department 5000 regulations 784 Regulations (effective)

Problem Findings Phase 2 Excise tax regulatory reform Problem findings § Some regulations were

Problem Findings Phase 2 Excise tax regulatory reform Problem findings § Some regulations were repealed and some were amend, which need to be systemized form simplicity § 784 regulations consider to be difficult to implement by taxpayers and administer by the administration § Disorganized regulations may become unfriendly to foreign investors and obstacle to ACE economic integration in future

Proposed Reform Excise tax regulatory reform Proposed Reform Excise Act – 385 Reg. Excise

Proposed Reform Excise tax regulatory reform Proposed Reform Excise Act – 385 Reg. Excise Tariff Act – 19 Reg. Tobacco Act – 117 Reg. Liquor Act – 216 Reg. Playing Card Act – 42 Reg. 143 regulations under uniform Excise Tax Code

Proposed Reform Excise tax regulatory reform Proposed New Regulatory Structure § Propose new 126

Proposed Reform Excise tax regulatory reform Proposed New Regulatory Structure § Propose new 126 regulations - grouping without any significant amendment of 784 regulations § Propose new 17 regulations under new excise tax code

Thailand – “Work in Progress” Legislative reform § Repeal several excise tax acts into

Thailand – “Work in Progress” Legislative reform § Repeal several excise tax acts into uniform excise tax code under philosophy of certainty to taxpayers and flexibility to tax administrators § Include undefined terms in the new Code, for example, “retail price” and “suggested retail price”

Thailand – “Work in Progress” § Adopt “Mix System” which uses both Ad Valorem

Thailand – “Work in Progress” § Adopt “Mix System” which uses both Ad Valorem and specific (EU system) rather than either Ad Valorem or specific, which one is higher § Adopt “suggested retail price” used for both domestic producers and importers and repeal “ex -factory price” and “CIF”

Thailand – “Work in Progress” § Add excise tax refund provision in case where

Thailand – “Work in Progress” § Add excise tax refund provision in case where taxes have been pay more than it should be or pay without a duty to pay § Amend physical document submission (e. g. , accounting report) to electronic document submission

Thank you

Thank you