The amended excise tax structure for cigarettes is scheduled to take effect on Oct 1, in response to the Tobacco Authority of Thailand's request to review the 40% flat tax rate, says the Excise Department.
The present tobacco tax structure is scheduled to expire in September, according to Excise Department director-general Lavaron Sangsnit.
Although details of an amended excise tax rate for cigarettes have not been disclosed, the new structure will be based on four principles, which aim to strike a balance between farmers' income, public health, government revenue and efforts to prevent smuggling, said Mr Lavaron.
The new structure intends to limit the impact on the income of tobacco farmers, who sell their produce to the authority, when domestic cigarette sales stumble.
The new structure also aims to discourage people from smoking and simultaneously thwart the smuggling of foreign cigarettes, which avoid any duty fees, he said.
Government revenue should not be affected by the new tobacco tax structure either, as the excise tax levied on cigarettes generates annual revenue of around 60 billion baht, accounting for 10% of the Excise Department's total revenue, said Mr Lavaron.
At present, a two-tier system is applied for excise duties levied on cigarettes. A 20% tax rate is applied to the retail price for packs costing up to 60 baht. If the retail price exceeds 60 baht per pack, a 40% tax rate is applied.
A flat tax rate of 40% was scheduled to be applied since October 2019, regardless of the retail price, but there has been opposition from the authority and tobacco farmers.
The authority, which monopolises domestic tobacco production, and tobacco farmers have requested the Excise Department review the 40% flat tax rate because a single-tier rate would affect the income earned by the authority and farmers.
The Finance Ministry previously requested the cabinet extend the two-tier tobacco tax rate to the end of September 2020. This extension was prolonged through September 2021.