Excise Department to reassess retail prices for higher tax revenue
The Excise Department is set to reassess the recommended retail prices that form the foundation for calculating excise taxes. This revision comes as many products’ current prices are estimated to be 5% to 10% below the actual selling prices.
According to Bangkok Post, a source from the department indicated that setting recommended retail prices too low results in reduced revenue collection for the government.
Annually, the department collects between 500 to 600 billion baht. With a proposed 5% increase in retail prices, government revenue could see a boost of an additional 20 to 30 billion baht.
The impending review will focus on high-value items, including cars, particularly those in the grey market. These imported vehicles often have retail prices that are 5% to 15% less than their true market value.
The department introduced the new Excise Tax Act in 2017, altering the tax calculation basis from the previous ex-factory or cost, insurance, and freight (CIF) prices to recommended retail prices, excluding value-added tax.
Under this legislation, if recommended retail prices fail to reflect actual values or align with market trends, the director-general can announce a recommended retail price for tax calculations.
This price is derived from the sale or import price, following criteria and procedures outlined in ministerial regulations. To ensure recommended retail prices reflect the market, the department will reference prices from major sales venues like modern trade stores as benchmarks.
According to the law, recommended retail prices must be based on production costs, management expenses, and standard profit margins, and must not be less than the consumer selling price in regular markets.
The change in excise tax calculation was designed to counter vendors setting artificially low ex-factory or CIF prices, which negatively impacted revenue collection. The source further explained that recommended retail prices are more verifiable market prices compared to ex-factory or CIF prices.
Frequently Asked Questions
Here are some common questions asked about this news.
Why might the reassessment of recommended retail prices impact consumer behaviour in Thailand?
Price adjustments could influence buying patterns, as consumers react to perceived fairness and affordability in product pricing.
How can the Excise Department ensure new retail prices accurately reflect market conditions?
By referencing major sales venues and analyzing production costs, management expenses, and profit margins, ensuring alignment with market trends.
What if the recommended retail prices continue to diverge from actual market values?
Persistent discrepancies might necessitate further regulatory interventions or adjustments to maintain revenue streams and market equilibrium.
What potential economic effects could arise from increasing recommended retail prices by 5%?
An increase could boost government revenue but might also affect consumer spending and market dynamics, necessitating careful balance.
