A customer chooses a drink at a convenience store. The excise tax on sugary drinks will take effect gradually.
Tax rates on drinks with a sugar-based sweetener will be gradually raised every two years of a six-year span to give time for producers to reduce sugar content in soft drinks, says Finance Minister Apisak Tantivorawong.
The levy for the first two years after the new excise law is enforced will be low to let sweetened soft drink makers lessen sugar in their drinks to aid public health, he said. These operators will be subject to both excise and sugary drink taxes, but their tax burden during the first two years will merely change from the current tax structure.
The new excise tax structure for drinks with sugar-based sweeteners, part of the new excise law, will take effect Sept 16.
The key part of the law replaces the existing ex-factory prices and cost, insurance and freight (CIF) values with suggested retail prices for the excise tax base computation.
The Excise Department hopes that suggested retail prices create a fairer system for makers and importers after it found that some businesses were exploiting the ex-factory and CIF values to understate their tax bills.
Mr Apisak said that under the new excise law, drinks that are now tax-exempt must pay the sugary drink tax, which is meant to create fairness.
Ready-to-drink green tea and coffee have been exempted from excise tax by claiming to use domestic raw materials, while fruit and vegetable drinks must contain at least 10% natural ingredients to escape an excise tax of 20% of the final wholesale price.
Mr Apisak said the tax bills of operators whose products are now liable for tax will hardly change after the new excise law is enforced, as the department is promoting a tax neutrality concept.
But those operators exploiting loopholes to understate their tax payments, or those whose products have a high profit margin, will need to shoulder a higher tax burden, he said.
In related news, Mr Apisak said a conclusion has not been reached on a tax break for domestic travel expenses, as the Tourism Authority of Thailand (TAT) proposal is beyond the burden the Finance Ministry can accept.
The ministry wants operators in community-based tourism schemes to benefit from the proposed tax deduction, but the major hurdle is that these operators have not entered the tax system and cannot issue tax invoices to customers.
The TAT’s initial proposal called for tourists engaged in community-based tourism during the final quarter of the year to be allowed to claim a personal income tax deduction of 10,000-50,000 baht, depending on the area visited.
The ministry let individual taxpayers deduct up to 15,000 baht in expenses paid for domestic accommodation and to tourism agencies during October to December last year, and another 15,000 for travel expenses incurred throughout the remaining months of 2016, from their income tax.