Understanding the Thailand customs and trade environment

Navigating through Thailand’s labyrinth of customs legislation and legal framework can be challenging for companies, especially with the vast number of different regulations that could apply when importing/exporting goods and the number of government agencies that could be involved when moving goods in- and outside of Thailand. Combined with Thai Customs becoming more sophisticated in their approach on post clearance audits and investigations to ensure compliance and collect revenue and Thailand’s customs penalty regime in case of non-compliance, companies find themselves quite often at the back foot when dealing with Thai Customs.

On the other hand, as part of the ASEAN Economic Community (AEC) integration process, Thai Customs has implemented procedures and special schemes to facilitate trade such as the Authorised Economic Operators (AEO) schemes, Thai National Single Window (NSW) etc. The Government has developed various attractive duty saving facilities to draw foreign investment in various economic sectors which range from duty and incentives under the Board of Investment, Free Zones privileges to duty drawback schemes. Thailand has also stepped its efforts in concluding more FTAs which provide Thai companies better market access opportunities in other countries and import duty benefits in Thailand.

To take advantage of the available opportunities, it is important for companies to understand the differences among the various customs procedures and privileges and their corresponding requirements, in order to identify the optimal privilege that is suitable for your business.

Equipping yourselves with the knowledge and understanding of the latest trends in Customs’ perspective of each technical area could help mitigate customs risks. Thus, improving your competitiveness through customs planning should go hand in hand with adoption of the best practice in customs compliance and risk management.

Our services

Our services in Thailand can be broadly categorised into “Customs & Trade Planning” and “Ensuring Customs Compliance and Managing Customs Risks”.  Below are the typical services that our team in Thailand provides:

Strategic Customs & Trade Planning

  • Assistance with identifying duty savings opportunities arising from Thailand’s Free Trade Agreements (FTA) network
  • Identify and implement strategies to save duties on unbundling certain elements from the import price (e.g. non-dutiable royalties, buying commissions etc.)
  • Assist companies with identifying the most appropriate customs and tax incentive schemes based on their current and future operations in Thailand (e.g. Free Zones, Bonded Warehouses, Board of Investment (BOI) promotion, Duty Drawback for Re-Exported Goods etc.)
  • Carrying out customs reviews to identify possible current and future duty saving opportunities
  • Reviewing HS codes of imported products and identify the most optimum way to import them into Thailand (i.e. tariff engineering)

Customs Compliance & Risk Management

  • Carrying out customs compliance health checks to identify historic and future customs risks and providing strategies to minimise these risks
  • Preparing companies for a voluntary disclosure of non-compliance issues and provision of ongoing assistance throughout the voluntary disclosure process
  • Preparing companies for a customs audit and providing assistance to companies throughout the customs audit/investigation process
  • Assisting in applying for Advance and Post-importation customs rulings
  • Reviewing compliance for managing import & export of controlled goods (e.g. hazardous substances, dual-use goods) and non-core-business importations (e.g. business and technical documents and computer software)
  • Provision of on-site customs and trade training and workshops

Case studies

Reducing an assessment of back-duties and penalties on royalties

A manufacturer of automotive parts was audited by the Post-Clearance Audit Bureau (PCAB) of Customs and was challenged on the dutiability of the royalty fees paid under a License and Technical Assistance Agreement.

How we helped

WMS conducted an analysis of the License and Technical Assistance Agreement to assess the dutiability of the royalty fees from a Thai customs valuation perspective and provided strategies to mitigate risks resulting from historic as well as future shipments.

  • A technical assessment on the dutiability of the royalty fees;
  • Addressing the transactions of the concerned imported goods as well as strategies for future shipments; and
  • Provision of strategies and technical information and regulations to support the negotiation process with PCAB to reduce the duty and tax exposure.

Benefit for the client

  • Significant reduction of the duty and tax exposure from approximately 80 million THB (2,667,000 USD) to 14 Million THB (467,000 USD).

Assistance on a voluntarily disclosure of non-compliance issues to Thai Customs for a leading trading company in Thailand

A company approached us as it was concerned about possible non-compliance with various customs laws and regulations, and the potential for back-duties, penalties and supply chain disruptions.

How we helped

WMS provided support to minimise the duty and tax exposure as a result of non-compliance issues related to the use of duty privileges for imported automotive parts. Our work included:

  • Analysis on the potential risks and exposures for historic and future ongoing shipments;
  • Provision of technical information and precedent rulings to support the company’s position;
  • Provision of a report on available self-disclosure possibilities, including pros and cons and potential penalties under each scenario, and recommendations on strategies and steps to mitigate the customs risks and exposures; and
  • Preparing the company for the voluntary disclosure and provision of ongoing assistance throughout the voluntary disclosure process.

Benefit for the client

  • Significant mitigation of duty and tax exposure for approximately 550 million THB (18.3 million USD).
  • Improved compliance level for the company in relation to using duty privileges for future shipments.

Authorised Economic Operators (AEO)

Are you aware that the customs gold card scheme ended on 1 October 2013?

Gold card holders who don’t become Authorised Economic Operators (AEO) will lose their privileges.

Benefits of becoming an AEO include:

  • exemption from inspection upon import/export
  • waiver of placing guarantees for certain shipments
  • special timelines for duty privilege schemes
  • audit review period limited to only two years after customs clearance

Opportunity and Compliance Assessment Tool (OCAT)

  • Do you know how much duties you’ve paid in the past five years or what your top five duty spend products are?
  • Do you know whether you’re overpaying duty or losing out on available customs privileges?
  • Have you recently carried out an internal customs compliance review?
  • Have you been audited by Customs in the past two years?
  • Do you know what the penalties are in case of customs non-compliance?

Don’t get caught out

If you answered 'no' to any of these questions, there’s a big chance you have customs risks related to your import/export operations in Thailand. Either that or you’re missing out on opportunities to save money and privileges.

The regulatory Customs environment in Thailand is complex and continually evolving. In our experience, companies find themselves on the back foot when dealing with Thai Customs, especially during a customs audit or investigation.

Equipping yourself with information on your customs operations and assessing your compliance level could help mitigate customs risks and assist your company in identifying possible customs opportunities.

So how can we help you?

We’ve developed OCAT (Opportunity & Compliance Assessment Tool) to quickly obtain information on your company’s customs operations and to provide you with a report on possible key compliance issues on past imports and identify opportunities to minimise duties payable on future imports.

The good thing for you is that the analysis can be conducted from our offices, so it won’t tie up your resources.

As part of the service, we will:

  • prepare a letter to obtain your company’s accurate import and export data from Thai Customs for the past 5 years, and
  • analyse the data and identify key potential compliance issues and savings opportunities.

What will you get out of it?

  • Accurate customs data for your company for the past 5 years.
  • A Dashboard Report that summarises your company’s customs operations and activities, total duties paid and any key areas of potential compliance issues and savings opportunities.
  • A meeting with us to discuss our findings. We’ll discuss with you implementing strategies to minimise identified risks or discuss ways to benefit from the identified savings opportunities.

Contact us

Paul Sumner

Partner, Philippines & Thailand, PwC Asia Pacific Customs and Trade

Tel: +662 844 1305

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