Juice tax loopholes set to be plugged

The Excise Department plans to restructure non-alcoholic beverage taxes, with the focus on fruit juices, to plug loopholes and prepare for regional standardisation.

"We need to consult international codes on beverage taxation and tax exemptions. We are about to become part of the ASEAN Economic Community, and many foreigners now visit Thailand. Products with little juice content or low-quality imported products could ruin the country's image," Somchai Pulsawas, director-general of the department, said last week.

Somchai is meeting with the Food and Drug Administration (FDA) today to obtain information on all the beverages on the market.

The department now collects about Bt20 billion per year from non-alcoholic beverages. Half of the receipts come from fruit juices, even though they are taxed at only 20 per cent of their prices.

However, the tax is waived for over 100 items, particularly those containing at least 10-per-cent fruit. Many makers are now selling juices with at least 10-per-cent fruit to avoid paying taxes.

The department also waives excise taxes on products aimed at enhancing the quality of life and income of farmers.

However, some manufacturers are using imported concentrates, which does not benefit local farmers.

Juice contents could be used to determine tax rates. If 100-per-cent fruit juices are taxed at one rate, diluted juices will be subjected to a higher rate.

In the meeting with the FDA, the department aims to get information on the nutritional value of juice content.

The department needs to seek more revenue. During the first four months of fiscal 2013, it collected Bt157 billion in revenue - 41.36 per cent higher than the same period last year and 15.58 per cent higher than targeted.

The top five items were automobiles at Bt60.1 billion, beer at Bt26 billion, tobacco at Bt22 billion, fuel at Bt21 billion and alcohol at Bt18 billion.