WASHINGTON: The Finance Ministry is poised to cut import duty on up to 1,000 items in a bid to strengthen the country’s competitiveness, says the Fiscal Policy Office (FPO). The targeted items are intermediate and finished goods, director-general Krisada Chinavicharana said.
He said the FPO had determined cutting import duty on 700 of the 1,000 items would not pose a threat to local operators that manufactured them. The remaining items are under the Finance Ministry’s consideration. The reduction in import duty is expected to be announced early next year.
The potential cut in import duty for the 1,000 products is to comply with the new import duty structure, which has been implemented in recent years. Under the new structure imported raw materials and capital goods are exempt, while intermediate goods are charged 3% and finished products 7-10%.
The previous tax structure, enacted in 1999, charged import duty of 1% for raw materials, 5% for intermediate goods and 10% for finished products. For instance, a finished product made from intermediate and raw materials from other countries is taxed at 10% to protect local manufacturers.
As part of the new import duty structure, the Finance Ministry last year trimmed duty for 1,500 raw material items, which caused the Customs Department to lose 6 billion baht in tax revenue.
A Finance Ministry source said the import duty cut was to beef up the country’s competitiveness, as Thai products might lose their appeal if they were taxed at a higher rate than those from other countries, particularly under free trade agreements (FTAs). The ministry believes the new import duty can compete with other countries that have signed FTAs, the source said.
