Thai government plans 7% VAT on imported goods from May

The Thai government, under the directive of Prime Minister Srettha Thavisin, is preparing to implement a 7% value-added tax (VAT) on imported goods valued at 1 baht and above, starting in May.

Currently, goods sold for less than 1,500 baht (US$40) per parcel and imported into Thailand are exempt from VAT. Deputy Finance Minister Julapun Amornvivat announced these plans after yesterday’s Cabinet meeting, asserting the new VAT collection is a move towards fairness for Thai small businesses.

“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.”

The move is also expected to boost government tax revenue.

The new tax measure is endorsed by Thanawat Malabuppha, honorary president and advisor of the Thai e-Commerce Association, who believes it will enhance the competitiveness of local small and medium-sized enterprises (SMEs). He noted that low-priced Chinese goods, sold on e-commerce platforms like Lazada, Shopee, and TikTok Shop, have flooded the Thai market, causing intense price competition and disadvantaging local SMEs.

Paul Srivorakul, chief executive of aCommerce, a leading e-commerce enabler, agrees with Thanawat’s view.

“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.”

Paul also acknowledged that while this might complicate customs procedures and potentially slow down the import of legitimate goods, the benefits to local SMEs and the Thai economy are more significant.

Sangchai Theerakulwanich, President of the Federation of Thai SMEs, welcomed the move as a step towards fairer trade.

“Cheap imports are usually ordered online, causing local sellers who cannot compete to shut down.”

Sangchai also called for better state monitoring of border trade in light of reports of smuggling goods into Thailand to avoid customs duties, reported Bangkok Post.

The Federation of Thai Industries (FTI) has underscored the need for better protection against the influx of cheap Chinese products to maintain their competitiveness. Chairman of the FTI, Kriengkrai Thiennukul, revealed that the import of Chinese products has led some local manufacturers, especially SMEs, to slash production by 50%.