Thailand Defining For Sweetness Tax and the Adjustment of the Industry

It is now clear that the “sugar tax” that the government will impose on sugary drinks in a bid to encourage consumers to become more health conscious will become effective on September 16, 2017 as stipulated by the new Excise Act.

As for how the tax structure will be, Nutthakorn Utensute, Director of the Tax Planning Bureau of the Excise Department, the Ministry of Finance, explained at the talk entitled “Sugar Tax and the Adjustment of the Industry,” “Normally, beverages are already taxed but only on their values, at the rate of 20% ex-factory prices or CIF values.”

However, the new Act will also take into account the sugar content. Beverages with over 10% sugar content per 100 ml. will be levied at a progressive tax rate, with beverages with higher contents carrying a larger tax burden.

“The previous 20% tax on prices will be reduced, so that when combined with the tax on the sugar content, the tax burden will be equivalent or as close to earlier as possible.”

However, to allow the private sector to adjust, after the Act comes into force, there will be a two-year period in which products with sugar content higher than the set mark will be exempt from the sugar content levy but will still be taxed on their values just as before.

On the other hand, there will be tax incentives for products with less sugar than the prescribed amount to motivate manufacturers to release new products or adjust their existing ones.

After the two-year period, manufacturers who refuse to reduce the sweetness of their goods with higher sugar content than the threshold will be subject to levies at a progressive rate in accordance with both the duration and the sugar content.

Nutthakorn also revealed that the sugar content subject to taxation would include not only added sugar but also natural sugar but would exclude artificial sweeteners under the Food and Drug Administration’s supervision and milk products.

The private sector has begun to make changes in preparation for this taxation scheme. Mr. Prachuab Tayakeepisut, Director of Corporate Affairs at Greenspot (Thailand) Co., Ltd., the manufacturer of Vitamilk soy milk, said that the company had continuously developed its products in response to both the new tax policy and health trends and would release 1-2 healthy alternatives each year. Last month, the company just launched new smooth and milky soymilk with 4% sugar.

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