Thai government cuts alcohol taxes to boost tourism

A decision by the Thai government to cut alcohol taxes has been made in an effort to boost tourism in the country.

The move, which has been approved by the cabinet, will see import tariffs on wine exempted, which are currently at 54% and 60% of their declared value.

In addition, the excise tax on wine will be reduced from 10% to 5% and locally produced alcohol from 10% to 0% in order to assist small-scale firms.

According to the Bangkok Post, the new tax rules will take place shortly.

Income

The news follows rises in excise taxes on alcoholic beverages and cigarettes in recent years, which helped to generate as much as 12bn baht more in tax revenue, with imported wine increasing the sharpest.

Thailand appears now to be moving away from punitive taxes on alcoholic beverages, which included specifica taxes on French and American wines that were as high as nearly 400% including excise tax, municipal tax, health tax and import tariff when an excise act was introduced in 2017.

It also follows concern last May that a proposed tax hike on alcohol-free beer in Thailand could “clip the wings” of the niche category “even before it takes off”, analytics and consulting firm GlobalData claimed.

The latest move will impact the country’s coffers though, as last year, the government collected almost ฿178bn (£3.9bn) in alcohol, beer and other beverage taxes.  This included ฿64.17bn (|£1.4bn) from alcoholic beverages, ฿86.5bn (£1.9bn) from beer and ฿26.95bn (£584m) from other beverages.

Currently, the excise tax is a two-tier system with wine priced at more than ฿1000 being hit with a 10% tax and 0% below that price point. But as the tax is also applied to ABV, all wines are taxed at ฿1500 per litre for 100º of alcohol content. This has now been cut to 1000 baht.

A separate tax on volume is also applied to local alcohol based on volume at ฿150 per litre for 100º of alcohol content, which still remains.