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According to the Bangkok Post, players in the Thai automobile industry are set to face higher tax payments once the country’s new excise tax bill is implemented.

The new law is based on a different set of calculations than that currently, and will utilise retail prices as the base for excise tax calculation as well as the cost, insurance and freight (CIF) on imported goods. The change is in order to plug loopholes used to avoid taxes, according to the country’s excise department director-general Somchai Poolsawasdi.

He said that many imported vehicles had claimed relatively low CIF compared with the retail prices of those cars, stating that the CIF of some vehicles in the market were currently being declared up to 20% lower than the ex-factory prices of locally-made vehicles.

The excise chief also added that domestic car makers had exercised their free-zone import tariff waivers by importing parts and components and producing the cars in free zones.

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While the import tariff is waived for export goods in these free zones, he said that automakers have been exporting the cars and then reimporting them, declaring CIF at lower than the ex-factory price of the same model that is ‘locally-made’, the report adds.

Somchai said that the excise tax has to be reformed because it has caused disputes between the government and taxpayers in many cases, and the outdated regulations in the current bill had resulted in many loopholes being taken advantage of.

He said that the change in the calculation base should improve the country’s excise tax revenue collection by around six billion baht (RM650 million) a year, adding that much of the additional revenue will come primarily from imported cars. Excise on both imported cigarettes and alcohol are also set to increase.

The new excise tax bill is part of the Thai government’s reform roadmap and was approved by the cabinet early last month. It must now pass through three readings in the Kingdom’s national legislative assembly, and once the new bill passes the final reading it will be announced in the Royal Gazette and come into effect 180 days on.