Against an annual production output of a million litres, imports account for 18.5 million litres per year, for a market worth B4 billion before customs, thus estimated at (at least) B20bn in turnover on the retail market (source: Thai Customs, December 2022). Therefore, taxes on wine imports into Thailand is unlikely to be a protectionist measure.
Wine consumer market in Thailand
Until 2019, red wine dominated (85-90% of total consumption). Since the country’s reopening in 2022, white wine has gained ground, now comprising around 30% of total consumption.
Wine is primarily consumed in large hotels and international restaurants, with average prices ranging from B1,300 to B2,500 per bottle. The collector’s market is rapidly expanding, with private individuals importing fine wines, especially from Italy, through professional operators.
How are wine taxes calculated in Thailand?
As mentioned earlier, wine taxes in Thailand serve as a revenue source for the Thai government. The Excise Department, one of Thailand’s most efficient authorities, holds a prominent financial position, even surpassing the Revenue Department in budgetary terms.
Wine taxation in Thailand considers several factors:
- Ad Valorem Tax: The standard tax rate is 54%, calculated based on the DDU value, but countries with Free Trade Agreements are exempt.
- Alcohol Tax: This tax is calculated based on the alcohol content of wines, with an excise duty of B1,500 per litre of alcohol.
- Local Taxes: These taxes fund social initiatives and add a 17.5% increase to the total excise duty.
- Consumption Surcharge: Importers must declare the final retail price, and if it exceeds B1,000 (including VAT), a 10% tax is levied.
Value Added Tax (VAT) is also applied at a standard rate of 7% to the cumulative total of these taxes.
Importing wine to Thailand
Only Thai entities, whether individuals or juristic persons, are eligible to obtain the licences required for importing wines into Thailand. These are some of the requirements:
- Import Licence: It requires a registered address, not near schools or temples, and typically takes about 30 days to acquire.
- Wholesale Licence (Type 1): This licence, for selling quantities exceeding 10 litres, can be obtained in around 20 days.
- Retail License (Type 2): Necessary for selling single bottles or serving wine by the glass in shops and public establishments, with location restrictions.
- Other Licences: There are four additional types for private clubs and entertainment venues.
After obtaining licences, label registration with the Excise Department is crucial. Any discrepancies during customs categorisation can lead to delays and fines. Professional assistance in regulatory and customs matters is recommended. Once labels are approved, one bottle per label undergoes analysis, and then the initial batch of wine can be shipped. Customs will handle affixing Thai labels and excise duty payment stamps through your broker.
Free Trade Agreement between Thailand and Europe: reality or legend?
Ongoing discussions between Thailand and Europe on Free Trade Agreements, which began in 2013 and have seen interruptions, could potentially reduce or eliminate import duties. This would level the playing field for European and Australian wines, significantly impacting market shares. The recent ‘High Level Dialogue on ASEAN Italy Economic Relations’ conference in Bangkok on Oct 4 emphasised the importance of such agreements, as Europe imports more from Asean than it exports.
While Europe withdrew from negotiations in 2014 due to Thailand’s political situation, the roles have reversed, with Thailand now seeking a peaceful environment. Despite cultural and political differences, both sides share a mutual need, and a Free Trade Agreement is likely to materialise in 2024, although potential limitations may persist if geopolitical strategies remain unchanged.
By Diego Sala
To learn more about wine taxes and other licensing requirements for importing wine into Thailand, get in touch with specialists at info@silklegal.com or visit SilkLegal.com.