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Export: Special Provisions

Special provisions allow exporters greater flexibility in the export process.

Industrial Estates

Two categories of industrial estate are recognized in Thailand:

A General Industrial Zone means an area designated for industrial activities or other activities beneficial to or connected with industrial activities.
An Export Processing Zone (EPZ) means an area designated for industrial activities, trading, or services or other activities beneficial to or connected with industrial activities, trading or services for the purpose of exporting products.

A few benefits given to most of the companies that apply for the Industrial Estate Program are as follows:

Relief from special surcharges and import/internal taxes/duties

Machinery, equipment, tools, and supplies, including parts of them removed into the EPZ for the purpose of producing goods and constructing, assembling, or installing a factory or a building in the EPZ, are not subject to special surcharges, import duty, excise tax, and value-added tax (VAT) under the Investment Promotion Act.

Relief from export duty, excise taxes, and VAT

Goods imported, including products and by-products from the manufacture in the EPZ, are not subject to export duty, excise tax, and VAT, provided they are exported out of the country.

Eligibility for export tax refund/exemption schemes

Export merchandise entitled to export tax refund or exemption schemes qualifies for such schemes even after it is removed from the EPZ.

Zero Tax Rate

A zero percent tax rate is applied to calculate the VAT in the following circumstances:

Sale of services or goods among industrial operators, whether in the same or different EPZs
Sale of services or goods between industrial operators and bonded warehouse licensees
Domestic merchandise removed into the EPZ

Bonded Warehouses under Customs Act

Under a bonded warehouse scheme, the imported goods stored in a bonded warehouse for the purpose of re-exportation are exempted from payment of import/export taxes and duties. The goods are exempted regardless of being exported in the same form as imported or being produced, mixed, or assembled as other goods.

Free Zone Areas (FZA)

A Free Zone Area (FZA) is a designated area for industrial or commercial operation or any other operation involving economic growth and development. Foreign and domestic merchandise moved into an FZA are eligible for tax and duty privileges as indicated by law.

The Free Zone Program can offer numerous advantages to manufacturers and processors located in Thailand. A few benefits that most of the companies can claim are as follows:

Relief from import and internal taxes/duties

Imported merchandise, moved into, or manufactured in, a FZA for industrial or commercial operations or any other operation involving economic growth and development is not subject to import taxes and duties. This includes:

Machinery, equipment, and parts
Foreign merchandise
Merchandise transferred from other Free Zones

Relief from export duty on re-exports

When foreign merchandise is brought into a Free Zone, no taxes and duties are owed until the merchandise leaves the zone and enters Thailand for consumption. If the imported merchandise is re-exported to other countries, no customs duty is charged.

Relief from standard/quality control requirements

Domestic merchandise or raw materials moved into a FZA for manufacturing, mixing, assembling, packing, or any other operation is relieved from the standard/quality control requirements or any other similar requirements; provided such merchandise is re-exported to other countries at a later stage.

Duty exemption on waste, scrap, and yield loss

If the processor or manufacturer is conducting its operations within a Free Zone environment, the merchandise is not considered imported, and therefore scrap, waste, or yield loss from an imported component is exempted from import and internal taxes and duties, if applicable.

Eligible for export tax refund/exemption schemes

Export merchandise eligible for export tax refund or exemption schemes qualifies for such schemes even after it is removed from the Free Zone.

Investment Promotion Scheme

Thai customs regulates import of machinery and raw materials. These regulations have room for entrepreneurs who are granted import tax and duty privileges from the Board of Investment (BOI).

Imported goods moved into Investment Promotion Zones are granted tax and duty privileges. These include:

Machinery

Machinery removed into the Investment Promotion Zones is granted either import tax and duty-free allowance or 50% reduction on import taxes and duties, depending on the location of the zones.

Raw or Essential Materials

Raw or essential materials moved into the Investment Promotion Zones for manufacturing export products are exempted from import taxes and duties from one to five years, depending on the location of the zones.

Export Financing

Thailand has several programs that benefit manufactured and processed agricultural producers. These usually take the form of preferential financing, tax certificates, rebate of taxes, and import duties. The Thailand Export-Import (EXIM) Bank has taken over many of these programs and has recently offered an expanded credit program to stimulate export activity during the economic downturn in Thailand.

The bank provides Thai exporters with short-term credit for imports and exports, medium-term credit to increase production capacity, and long-term credit to support Thai investment abroad or to promote the export of machinery and turnkey projects and provide insurance against foreign exchange risks. Particular attention has been given to small and new exporters who have not received support or sufficient credit from commercial banks.

Export Credit Insurance facilities protect exporters’ foreign receivables against nonpayment risks. In case of payment defaults caused by overseas buyers, the EXIM Bank compensates for the loss according to conditions specified in the insurance policy.

Some of the policies offered by the EXIM Bank are as follows:

EXIM Sure

This is an insurance service suitable for exporters who require the EXIM bank to oversee each export shipment and monitor overdue payment closely. The compensation will be paid in case of loss arising from commercial and political risks.

EXIM Flexi

This is designed for experienced exporters who maintain good record-keeping of customer payment history and want to obtain an export insurance coverage that is flexible and in line with their specific requirements to avoid document preparation hurdles.

EXIM 4 SMEs

This export credit insurance service protects Small and Medium Enterprise (SME) exporters from nonpayment risks. The facility is suitable for exporters with export values not exceeding 100 million Thai baht. Key service features include lower premium rate, fast approval process, and up to 90 percent coverage against loss.

Note: The above information is subject to change. Exporters are advised to obtain the most current information from a customs broker, freight forwarder, or the local customs authorities.