Effective January 2, 2024, the Thai Cabinet has enacted a significant policy slashing excise taxes on wines and spirits. This policy is part of a strategic effort to establish Thailand as a premier destination for luxury tourism and gourmet dining, with the added benefit of affordability. A key element of this policy is the overhaul of the existing wine tax structure, along with granting tax exemptions for certain product.
Here’s a breakdown of the updated tax rates:
- Grape wines, including sparkling varieties, will incur a unitary excise tax of 5% based on their retail value, plus an additional levy of 1,000 baht per each liter of alcohol.
- Fruit wines that include grapes in their blend, similar to Soju, will no longer have a value-based excise tax (effectively 0%), and will be charged 900 baht per liter of alcohol.
- Traditional Thai spirits with an alcohol volume up to 7% will also be exempt from a value-based excise tax and will be charged 150 baht per liter of alcohol.
- Blended spirits comprising local and distilled alcohols with an alcohol volume exceeding 7% will be taxed 10% ad-valorem, along with a charge of 255 baht per liter.
- Homemade liquors, not intended for commercial distribution, will be integrated into this new tax framework and will be exempt from value-based excise taxes.
Furthermore, the Ministry of Finance, through the Thai Customs Department, is preparing a ministerial directive to eliminate customs duties in alignment with Section 12 of the Customs Tariff Act B.E. 2530. This amendment proposes eliminating customs duties across the board for wines classified under tariff codes 22.04 and 22.05, which include wines derived from fresh grapes, grape musts, vermouth, and other similar wines flavored with botanical or aromatic extracts. This change will effectively reduce the customs duty from a substantial 60% to a complete exemption for 21 items within these classifications.
Thus, both wine fans and distributors in Thailand have a reason to toast. Provided the new tax structure welcomes much anticipated price reductions, Thailand’s wine and spirit market is ripe for growth. Ripe too, is the opportunity for U.S. wine companies to expand their presence in Thailand, thus, possibly expanding Thai-U.S. trade overall. Most certainly, gourmet dining in Thailand will see a new era of enjoyment and affordability!
Text Sources:
https://thaipublica.org/2024/01/mof-reduces-liquor-tax-increase-tourism-income/
https://www.siamdevelopment.com/changes-in-policies-in-wine-taxation-in-thailand/
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