Thailand: Excise Department proposes to adjust structure of alcohol and beer taxes

Thailand’s Excise Department is currently in discussions with relevant government and private sector agencies on proposals to adjust the structure of alcohol and beer taxes to align with the current situation and to be consistent with the development of alcoholic beverage products, The Star reported on August 14.

Currently, alcoholic beverages are subject to various tax rates, such as non-alcoholic beer with 0% alcohol content, according to Ekniti Nitithanprapas, director general of the Excise Department.

The study to adjust the structure of alcohol and beer taxes is not aimed at increasing taxes per se, but rather to categorise product types more clearly and accurately for proper taxation.

For example, beer with 0% alcohol content might see a change in tax rate if it is reclassified as beer, which could potentially result in a reduced tax rate compared to its current classification as a general beverage.

A consensus needs to be reached by all parties, including the Ministry of Public Health, for appropriate future tax collection, Ekniti explained.

The tax on soju is an issue because it is a distilled liquor that is often flavoured with fruits. While this blending reduces the alcohol content, it leads to a situation where the tax rate for the flavoured version is lower than that for distilled liquor.

Therefore, the suitability of soju taxation needs to be carefully studied to prevent any potential discrepancies, according to Ekniti.

The tax classification of distilled spirits and beer by the Excise Department is divided into groups such as distilled spirits like whisky and white spirits, and flavoured spirits like wine and fruit spirits.

The tax rate for flavoured spirits is generally lower than that for distilled spirits, largely due to the fact that certain flavoured spirits include provisions supporting the use of domestic fruits, Ekniti stated.

Consequently, if a wine is made exclusively from grapes, its tax rate will generally be higher because it is imported, whereas some soju that contains Thai fruits supported by the government, might exploit tax loopholes in the category of flavoured spirits due to its blend with white spirits, Ekniti added.

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