Alcohol tax overhaul by Excise Dept planned to close loopholes

The head of the Excise Department announced plans to overhaul the excise tax structure on alcohol and beer, aiming to eliminate existing tax loopholes. Ekniti Nitithanprapas said a formal conversation is ongoing with the private sector to secure an equitable and suitable tax framework.

Furthermore, many new beverage entries on the market are technically slipping through the cracks of taxation, including beers without alcohol, despite the recent tax restructure from factory-basis pricing to retail sales-led calculations, Ekniti added. These said loopholes permit these products to fall under the non-alcoholic drinks tax bracket.

Issues surfaced regarding a growing trend in the Thai market: Korean soju. The multi-process alcoholic drink involving both fermentation and distillation has been placed under the fermented spirits tax class at a mere 10%. This falls short in contrast with the hefty 20% tax applied to distilled spirits, barring rice whisky. According to Ekniti, this comparably low tax rate feels unfitting for such alcohol.

However, Ekniti stated this tax restructuring has not been designed with revenue increase in mind but rather, it is a targeted measure to tackle rampant tax evasion.

Take the case of zero-alcohol beers for example. They could potentially fall into the alcohol category but face little to no tax due to their non-alcoholic nature.

The road to these changes will require consultation with the appropriate authorities in the public and private sectors, including the Ministry of Public Health. The goal of this tax overhaul is to reach an equitable resolution that balances the interests of all parties involved, Ekniti underlined.

Ongoing tax evasions due to the overlapping and potentially exploitable existing beverage tax framework will be dealt with, Ekniti assured. In light of this, the department is preparing to rework the ministerial regulations to counteract upcoming trends and resolve the issue at hand, reported Bangkok Post.

More public participation will also be sought in the oversight of liquor and beer tax payments.

It’s important to note that these types of taxes are among the largest sources of revenue for the Excise Department. Through the fiscal year of 2022, the department bagged a hefty 599 billion baht in revenue.

Beer, contributing an impressive 85 billion, was the third most profitable tax following fuel and automobiles. Alcoholic liquor followed closely in fourth place with 59.2 billion.