Thai regulations on alcohol products
There are two types of alcohol to be imported into Thailand as defined by the Liquor Act of 1950 and the Alcoholic Beverage Control Act of 2008: distilled spirit and un-distilled spirit. Distilled spirits is alcohol over 15% like vodka, rum, or brandy and un-distilled spirit is alcohol under 15% like wine or beer.
The Ministry of Finance (Excise Department), which monitors the alcohol industry in Thailand, requires alcohol importers to fill out form “SOR2/74” and pay a fee for issued licenses when imported for trade or for non-trade activities.
To get a license to import for trade, a company needs to produce a copy of it’s liquor selling license, performa invoice, label sample, registration of business place or lease contract, and an ID card or a certificate of registration for businesses.
For non-trade licenses, a copy of the (Performa) invoice, ID card or a certificate of registration for businesses, and a power of attorney will suffice. When all forms and fees are paid, it should take about 30 days to issue the license.
Importers are required to get a license issued by the Excise Department to:
- License for alcohol production and possession of related equipment
- License for importation of more than one liter of alcohol
- License for transportation of untaxed alcohol from the factory
- License for transportation of more than ten liters of alcohol
- License for transportation of more than one liter but less than ten liter of alcohol between specified territories (provinces)
- License for selling alcohol products
Importation of alcohol in Thailand is very expensive for alcohol producers due to excise taxes and high tariff set by the Thai government. An imported good like alcohol in Thailand is taxed with the value added tax (VAT), customs duty, excise tax, and local or municipal tax. Prior to January 1, 2000 GATT agreement, Thailand used a “true market value system” which is the true price for like kind and quality goods sold without any deduction and abatement. Currently, taxes on imports are calculated by the Ad Valorem rate, which includes the sum of import tax, cost insurance freight (CIF) value and other appropriate charges stated above such as the VAT tax. To get the correct CIF value on imported wines and alcohol, the Thai Department of Customs uses the reference prices against the declared prices. If the declared price is lower, a reference price will be applied.
There is not much awareness in brands and qualities of wines in Thailand, largely due to the price index of alcohol. Attaining a good bottle of wine is for the upper class Thai, tourist, and expatriates in the country. Australian and New Zealand wines are cheaper because of the FTA agreement enacted in 2004. This agreement has allowed lower importation taxes and tariff on imports from New Zealand and Australia, which in turn creates a significant advantage in marketing for wine producers from these two countries, making their wines cheaper in retail and food service. Australian, New Zealand, Chilean and Spanish wines are considered value purchase wines to residents of Thailand, since import wines hold a higher value.
Most U.S.A wines are typically more expensive than the FTA countries; the duty and tax burden chart below gives a breakdown by exporting country.
Duty and Tax Burden for Wine
|Countries||Tariff Rate||Effective Duty and Tax Burden|
|USA, France, Italy, Chile and other countries under WTO agreement||54%||390.46%|
If you are a country under the Free Trade Agreement or the ASEAN (Association for Southeast Asian Nation) Free Trade Agreement, a reduction or exemption from taxes may apply when importing alcohol into Thailand. Member countries of the AFTA (ASEAN Free Trade Agreement) get lower rates of 0-5% if the goods are imported from that member country, as part of the Common Effective Preferential Tariff scheme.
Licensed producers are required to pay all applicable taxes on alcoholic beverages produced and sold in Thailand prior to transporting the alcohol out of the factory. This is done using the excise tax rates, which differs from steeped liquor to distilled liquor. Steeped liquor being, wines and sparkling wine (made from grapes) are varied from distilled liquor, which is white liquor or blended liquor such as whiskey or brandy or ethanol alcohol used by the pharmaceutical industry.
It seems like alcohol importers importing from countries without an FTA or a member of the ASEAN community suffer high tariffs and tax when importing into Thailand. There is little to nothing being done currently for importers outside these exemptions and agreements, making it expensive and difficult to import alcohol into Thailand. With a glum outlook on the industry for lower prices, Thai alcohol consumers have limited ability to find cheaper alcohol. U.S imported wines are typically more expensive and generally priced above other major wine importers. This is due to the high excise tax and tariff on the importation of wine and alcohol. Thailand is undoubtedly in need of an industry-wide taxing scheme that will implement equal and fair trade among all nations when importing alcohol.