Thailand

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.

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

• 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.