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WTO Points To Thailand's Complex Tax, Tariff Structure

by Mary Swire, Tax-News.com, Hong Kong

05 December 2011


A report from the Secretariat of the World Trade Organization (WTO), forming the basis of the sixth review of the trade policies and practices of Thailand which took place at the end of last month, points out, in particular, the complex and time-consuming systems that exist for paying taxes and tariffs in the country.

The WTO report notes that, for over 30 years Thailand has pursued a policy of export-led development that has successfully turned the country into a major exporter of industrial goods, and led to rapid economic growth.

It has an open economy, with the value of exports and imports equivalent to about 135% of gross domestic product in 2010. Most exports are of manufactured and processed goods, and most imports of raw materials and machines. Thailand also has a positive balance of trade in services, with a large surplus in tourism.

Given its trade reliance, and as a member of the Association of Southeast Asian Nations (ASEAN), Thailand is committed to deepening economic integration among members, including removing obstacles to trade and improving trade facilitation. It has, both unilaterally and through ASEAN, continued to pursue a policy of negotiating free-trade agreements (FTAs) of varying scope, with the focus on the Asia-Pacific area.

However, it is considered that, “in the absence of a comprehensive multilateral agreement on trade liberalization, the focus on FTAs is understandable, but the complex web of agreements with different rules of origin means it can be hard for traders to benefit from them.”

The WTO adds that Thailand's adoption of the ASEAN Harmonized Tariff Nomenclature has had the effect of increasing the number of tariff lines in its tariff book, but the actual rates on different products have not changed much since the WTO’s last review of Thailand and, on average, tariffs are applied at less than half their bound levels.

Also unchanged, the report says, is the complicated tariff structure with different ad valorem, specific duty and alternate duty rates. Over a quarter of tariff lines are unbound (including, according to the authorities, some agricultural products).

Thailand continues to use complicated systems for excise duties, personal income tax and corporate income tax, with a broad range of tax incentives for investments in different parts of the country. The report concludes that “the complex tax structure contributes to Thailand's low rating for ease of paying taxes. Although a considerable effort is being made to simplify the tax assessment and payment systems, it would also help to simplify the taxes themselves, particularly excise duties and tariffs.”

In addition, it is reported that Thailand has eliminated export subsidies under several programmes, but maintains a number of schemes to promote and facilitate exports. These export supports include bonded warehouses, duty drawbacks, and tax refunds for import duties and value-added tax.

Thailand also continues to promote foreign direct investment through tax advantages for investments in less developed areas of the country and through the industrial free zones. However, Thailand has pointed out that there are no export-related requirements or privileges attached to such investments.

TAGS: tax | free trade agreement (FTA) | tax incentives | law | tariffs | World Trade Organisation (WTO) | Thailand | agreements | trade

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