Chinese goods flood northeastern checkpoints

One issue the private sector has urged the government to address is the continuous influx of Chinese goods into Thailand, which significantly impacts 23 industry groups, particularly small and medium-sized enterprises (SMEs).

The Joint Standing Committee on Commerce, Industry and Banking reported that in the first half of 2024, Thailand’s imports of Chinese goods increased by 7.12%, amounting to US$37.57 billion. This led to a trade deficit with China of $19.97 billion, a rise of 15.66% from 2023.

In response, the government has implemented proactive measures by imposing value-added tax (VAT) on imported goods priced below 1,500 baht and has instructed the Customs Department to tighten inspections of substandard products.

Moving forward, any online sales platform entering Thailand must establish an agreement with the Ministry of Finance and integrate its systems with the Revenue Department to facilitate VAT payments. Currently, all online product platforms are in discussions with the Revenue Department and are in the process of system integration.

"The collection of VAT will create a fairer competitive environment for Thai businesses," said Julapun Amornvivat, deputy minister of finance. “However, we acknowledge that the tax mechanism alone cannot resolve the issue of the overwhelming influx of Chinese goods. Therefore, I have instructed the Customs Department to intensify inspections of substandard products." 

Panthong Loykulnan, adviser on tax development and management at the Customs Department, said the department is preparing to announce an extension of the VAT collection period on imported goods priced below 1,500 baht for an additional three months, extending it until the end of March 2025, instead of concluding by the end of 2024.

"We must wait for the Revenue Department, which is the agency responsible for collecting this tax, to amend the legislation and finalise data connections with the online sales platforms," he said.

Since the Customs Department began collecting VAT on imported goods priced below 1,500 baht on July 5, 2024, it has generated revenue of more than 450 million baht during the last three months of the fiscal year 2024 (July-September 2024), averaging 150 million baht per month. 

The majority of these low-cost imports have entered through the Mukdahan and Nakhon Phanom customs checkpoints.

Panthong noted that in fiscal year 2024, there were 133 million imported items, with 120 million entering through northeastern customs checkpoints and another 13 million arriving by air through Suvarnabhumi Airport.

The reason many foreign operators choose to import through northeastern checkpoints is convenience and lower transportation costs, as shipping by boat or truck is less expensive than by air. 

Among these imports, 43 million items were found to lack import licences or were substandard.

In fiscal year 2024, there has been an increase in strict measures to detect substandard products and those lacking import licences, resulting in a total value exceeding 2.6 billion baht from 39,282 cases of products that failed to meet Thai Industrial Standards (TIS).

To facilitate faster product inspections and support VAT collection on imported goods priced below 1,500 baht, the Customs Department is set to adjust the requirements for licence applications to request new customs declarations. 

Effective November 1, one customs declaration will now permit the import of only 40 items, down from the previous allowance of 250 items.