Excise mulls delaying drink tax hike

Excise mulls delaying drink tax hike

Deferment aims to reduce financial burden for makers of sugary beverages

Beverages on display at a convenience store. The first phase of Thailand's excise tax on sugary drinks came into force on Sept 16, 2017.
Beverages on display at a convenience store. The first phase of Thailand's excise tax on sugary drinks came into force on Sept 16, 2017.

The Excise Department is considering freezing the step-up hike of the excise levy placed on drinks with a sugar-based sweetener to reduce business operators' financial burdens.

The amended excise tax structure on beverages came into force in 2017, adding a levy to sugar-based sweeteners on top of the excise duty charged on beverages.

The added excise tax on sugar-based sweetener gradually increases over four phases, intended to help entrepreneurs adjust to the higher tax burden, said Lavaron Sangsnit, director-general of the Excise Department.

Thailand has applied the new excise tax on sugary drinks, cigarettes, alcoholic beverages and imported wine since Sept 16, 2017. The levy on sugary drinks is capped at 20%, with beverages containing more sugar carrying a larger tax burden than less sweetened beverages.

The new rates rise on a gradual basis over four phases: Sept 16, 2017 to Sept 30, 2019; Oct 1, 2019 to Sept 30, 2021; Oct 1, 2021 to Sept 30, 2023; and from Oct 1, 2023.

Sugary drinks subject to the tax are carbonated soft drinks, energy and electrolyte drinks, fruit and vegetable juices, and sweetening agents.

With the third phase set to commence on Oct 1 this year, a considerable hike in the sugary drinks tax could affect business operators who are suffering from the Covid-19 crisis, said Mr Lavaron.

The Excise Department could postpone the third-phase implementation, but the length of this deferment has not been finalised, he said.

The department classified sugar content in beverages into six levels based on a volume of 100 millilitres: below six grammes, 6-8g, 8-10g, 10-14g, 14-18g, and more than 18g.

No sugary drinks tax is levied on sugar content of 6g in a 100ml beverage. But sugar content that exceeds 14g per 100ml, but no more than 18g, is liable for an additional three-baht excise duty per litre. The rate is set to increase to five baht on Oct 1 if the third-phase implementation is not deferred.

The Excise Department is studying taxation for salty foods, but Mr Lavaron said the department will not roll out any new excise tax measures this year because it would add a burden for both businesses and consumers. The department opted instead to increase tax collection efficiency to meet its excise tax collection target of 550 billion baht for fiscal 2021, he said.

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