ACFTA coming into force from January

The import duty on 703 items will be slashed from Jan 1 next year to comply with the Asean-China Free Trade Agreement (ACFTA).

The levy reduction will result in a Customs Department revenue loss of 800 million baht per year, said director-general Kulit Sombatsiri.

The 703 items were charged import duties that ranged from 15-20%, 12% and 10%. The new rates will be 5% or zero.

These items include tomatoes, marble, tyres, paper, offerings for worship, netting, shoes, wire and cable, three-wheel motorcycles, rope, steel, circuit boards, batteries, rice cookers, refrigerators, air conditioners and electricity panel boards.

The ACFTA has been effective since 2004 and import duties have been trimmed in phases. According to the agreement, goods under the normal track will be slashed to the final rate of zero and those under the sensitive track will have import duties cut or exempted later.

He said the Customs Department is requesting China revise the planned import duty cut for electric cars to zero, effective from Jan 1, as it could deal a blow to Thailand’s plan to become an electric vehicle (EV) manufacturing hub.

The lack of import duties will discourage other EV-manufacturing countries that have higher tax liabilities from investing in Thailand.

Under the ACFTA, EVs imported from China will be exempted from duty, while those from non-ACFTA countries are subject to an 80% import duty.

Thailand’s EV import duty has a high threshold with no FTA in place. For instance, Tesla Inc would have to pay an 80% import duty while Japanese EV makers are taxed 20%, down from 40%, as a result of the Japan-Thailand Economic Partnership Agreement.

EVs are one of 10 next-generation industries the government wants to promote to attract investment with an aim at boosting the country’s economic growth sustainably.

Mr Kulit recently said Chinese EVs have zero import duties because the FTA negotiations started at a time when such vehicles were not yet regarded as an investment priority for Thailand.

Source: https://www.bangkokpost.com/business/news/1363539/acfta-coming-into-force-from-january