All imported goods now face VAT
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All imported goods now face VAT

Move aims to assist small local businesses

A consumer looks for products while shopping online. (Photo: Varuth Hirunyatheb)
A consumer looks for products while shopping online. (Photo: Varuth Hirunyatheb)

Following a mandate from Prime Minister Srettha Thavisin, the government looks set to impose a 7% value-added tax (VAT) on imported goods valued from one baht up, commencing in May.

Goods sold for less than 1,500 baht per parcel and imported to Thailand are currently exempt from VAT.

Speaking after the weekly cabinet meeting on Tuesday, Deputy Finance Minister Julapun Amornvivat said the Finance Ministry and the Revenue Department have made progress and are finalising relevant legislation.

Legislation on VAT collection is expected to be completed by May, said Mr Julapun.

"The prime minister emphasised for a second time VAT must be collected for goods valued less than 1,500 baht per parcel," he said.

"VAT collection is to ensure fairness for small businesses in Thailand, as both foreign and domestic operators will have to pay taxes at the same rate."

According to Mr Julapun, the new initiative should also increase government tax revenue.


Thanawat Malabuppha, honorary president and advisor of the Thai e-Commerce Association, said the new measure should improve the competitiveness of local small and medium-sized enterprises (SMEs).

An influx of low-priced Chinese goods have flooded into Thailand, with warehouses in the country allowing swift delivery to local consumers and VAT exemption.

The Chinese products are sold on e-commerce platforms such as Lazada and Shopee as well as social commerce channel TikTok Shop.

The majority of popular products priced below 1,500 baht comprise mobile accessories, gadgets, power banks, clothes and utility products.

Mr Thanawat said Chinese suppliers authorised both local and Chinese distributors to sell products on e-marketplaces, resulting in price competition at the expense of local SMEs.

He said collection of VAT on these goods should reduce the trade deficit with China, which is 1 trillion baht per year.

Paul Srivorakul, chief executive of aCommerce, a leading e-commerce enabler, said the government implemented this policy because it helps protect local businesses from unfair competition.

The new rule ensures that all goods, regardless of origin, are subject to the same tax standards, levelling the playing field for local products and domestic businesses, he said.

This move should increase government revenue through import duties and VAT, said Mr Paul.

This revenue could be significant given the volume of low-value imports, as e-commerce accounts for 15% of retail value today, he said.

However, enforcing the duties on low-value goods might complicate customs procedures, potentially slowing the import of legitimate goods and affecting businesses that rely on imported products, said Mr Paul.

Lazada, Shopee and TikTok Shop benefit greatly from cheap imported goods, but may face challenges if the new rule affects consumer purchasing behaviour, he said.

However, the benefits to local SMEs and the Thai economy far outweigh the impact on Chinese e-commerce platforms and local consumer sentiment, said Mr Paul.

Thailand also needs a simplified tax structure, possibly a flat-rate tax model for low-value imports to ease the administrative burden on customs and businesses, he said.

Another concern is whether the customs process is data- and technology-driven, said Mr Paul.

"I'm sure the government has an automated system for declaring, assessing and collecting duties," he said.

"These systems are key to streamlining processes at scale, and most importantly will reduce the opportunities for misdeclaration and evasion."


Sangchai Theerakulwanich, president of the Federation of Thai SMEs, said the move is a fresh attempt to promote fair trade.

Importers could previously undercut Thai SMEs, which are required to pay the levy, he said.

Cheap imports are usually ordered online, causing local sellers who cannot compete to shut down, said Mr Sangchai.

Some SMEs need to adjust by adopting importation of goods, he said.

Mr Sangchai also wants better state monitoring of border trade following reports that some sellers avoided customs duties by smuggling goods into Thailand from neighbouring countries.

The government cannot only focus on goods ordered via e-commerce channels, he said.

"Thai entrepreneurs are already at a disadvantage because goods, especially from Chinese manufacturers, have lower costs," said Mr Sangchai.

"We need measures to protect our SMEs."

The Federation of Thai Industries (FTI) stressed earlier SMEs need better protection against the flood of cheap Chinese products to maintain their competitiveness.

Some products require inspection because they may not meet safety or environmental standards, said the FTI.

The import of Chinese products has caused some local manufacturers, especially SMEs, to reduce production by 50%, said Kriengkrai Thiennukul, chairman of the FTI.

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