CUSTOMS INCENTIVE SCHEMES

1. DUTY DRAWBACK UNDER SECTION 19 BIS
The duty drawback scheme enables exporting companies to obtain a refund of Customs duty paid on imported goods where those goods will have undergone production, mixing, assembling, or packing and then exported to a foreign port. Only the person who is the legal owner of the goods at the time the goods are exported, or a person to whom this right has been assigned, is eligible to make a claim for duty drawback.
 
DEFINITION
According to the Revised Kyoto Convention, the term “drawback” means the amount of import duties jand taxes repaid under the drawback procedure.
 
Duty drawback is provided under Section 19 bis of the Customs Act (No.9) B.E. 2482. It means the refund of import duty already paid or the return of guarantee placed on imports which have undergone production, mixing, assembling, or packing and then exported to a foreign port or as stores for use on board a ship proceeding to a foreign port within one 1 year from the date of importation.
 
ELIGIBILITY FOR DUTY DRAWBACK
If the exports meet the criteria listed below, the import duty already paid or the guarantee placed on such imports shall be repaid or returned as drawback to the importer.
(1) The drawback on such imports is not prohibited by the Ministerial Regulations.
(2) The quantity of the imports used in producing, mixing, assembling, or packing exports is in accordance with the rules approved or specified by Customs.
(3) The goods are exported through a port or place of exit designated for a drawback scheme.
(4) The goods are exported within one 1 year from the date of importation of the goods used in producing, mixing, assembling or packing exported goods. In case where there is a force majeure event that causes the delay of such exportation, Customs may extend the aforementioned period by six 6 months.
(5) A claim for drawback must be made within six 6 months from the date of exportation of the goods. However, Customs may extend this time limit on a case by case basis.
 
Eligible Goods for Duty Drawback

• Raw materials which are obviously seen in the exports e.g. fabrics, buttons, zippers and thread in garments, plastic sheeting in plastic products, etc.
• Raw materials used directly in the manufacturing process and contained in the exports but not obviously seen e.g. preservatives in canned food, stiffening agents in garments, solvents for glue in cellophane and anti-rust agents in electronic circuits, etc.
• Raw materials required in the manufacturing process e.g. sizing materials and bleaching agents used in textile products, sand paper, scouring powder, varnish, velvet, scouring agents, chalk, carbon paper and pattern.

Non Eligible Goods for Duty Drawback

• Machinery, tools, moulds and various appliances e.g. grinding ball for ores, tools and appliances made from tungsten carbide used in the manufacturing of watches, etc.
• Fuels for manufacturing e.g. fuel oil, firewood, coal, etc.

CONTACT
For further inquiry and information, you may contact

• the Customs Call Center at Tel. 1164
• the Customs Clinic at Tel. 02-667-7880-4, Fax. 02-667-7885, e-mail: customs_clinic@customs.go.th 

Additional information may also be obtained from Customs ports of entry/exit.  Please consult our telephone directory for a Customs office near you. The listing can be found under the “CONTACT US” section.

 
 2. BONDED WAREHOUSES 
It is in the nature of international trade practice that in many cases it is not known at the time of importation how imported goods will finally be disposed of. This means that the importers are obliged to store the goods for more or less long period.  It is, therefore, in the importers’ interest to place these goods under a Customs procedure which obviates the need to pay import taxes and duties or delay the payment of taxes and duties. Recognizing the need of the importers, Thai Customs has provided in its national legislations for Customs warehousing procedures allowing the importers to store the goods for more or less long period without payment of taxes and duties until the goods are actually taken for domestic consumption.

Under a bonded warehouse scheme, the imported goods stored in a bonded warehouse for the purpose of re-exportation shall be exempted from payment of import/export taxes and duties, regardless of being exported in the same nature as imported or in the nature of having been produced, mixed or assembled as other goods. 
Various types of bonded warehouses under Customs Act include:

1. Bonded Warehouse of Manufacturing Type;
2. Bonded Warehouse for Vessel Repair or Construction;
3. Bonded Warehouse of General Type;
4. Bonded Warehouse of General Type for Goods Demonstration or Exhibition;
5. Bonded Warehouse of General Type for Oil Storage;
6. Bonded Warehouse of Duty Free Shop Type; 
7. Bonded Warehouse Zone for Free Trade; and
8. Bonded Warehouse for Storage of Duty Free Goods.

CONTACT
For further inquiry and information, you may contact

• the Customs Call Center at Tel. 1164
• the Customs Clinic at Tel. 02-667-7880-4, Fax. 02-667-7885, e-mail: customs_clinic@customs.go.th

Additional information may also be obtained from Customs ports of entry/exit. Please consult our telephone directory for a Customs office near you.  The listing can be found under the “CONTACT US” section.
 
3. FREE ZONE
A Free Zone is an area designated by the Director-General of Customs under Section 97 ter of the Customs Act B.E. 2469 amended by Section 8 of the Customs Act (No.18) B.E. 2543 for industrial or commercial operation or any other activities beneficial to economy of the country. A Free Zone may be composed of many subzones operating either industrial/commercial Free Zones or any other operations involving in economic growth and development; or a combination of any type of Free Zone.
 
Advantages of Free Zone
All of the advantages a Free Zone Scheme can offer manufacturers and processors located in Thailand are numerous. A few main benefits that account for most of the  companies that use a Free Zone Scheme are listed below: Relief from Import and Internal Taxes/Duties: Imported merchandise, removed into or manufactured in a Free Zone for industrial or commercial operations or any other operations involving economic growth and development, is not subject to import taxes and duties. This includes:

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

In addition the imported merchandise removed into or manufactured in a Free Zone is also not subject to Value Added Tax (VAT), excise taxes, alcohol tax, including tax stamp and fees under the Alcohol Act, Tobacco Act, and Playing-Card Act. Additionally, a “ZERO” tax rate is applied to calculate VAT for domestic merchandise removed
into a Free Zone, provided that such merchandise subject to export duty   or exempted from export duty under the Customs Act.

• Relief from Export Duty on Re-Exports: Without a Free Zone, if a manufacturer or processor imports a component or raw material into Thailand, it is required to pay import taxes and duties at the time the component or raw material enters the country. However, a Free Zone is considered to be outside Thailand and Thai Customs territory. Accordingly, when foreign merchandise is brought into a Free Zone, no taxes and duties is owed until the merchandise leaves the Zone and enters Thailand for consumption.
  Only then is the merchandise considered imported and the duty paid. If the imported merchandise is re-exported to other countries, no Customs duty is charged. 
• Relief from Standard/Quality Control Requirements: Imported merchandise or domestic raw materials removed into a Free Zone for manufacturing, mixing, assembling, packing, or any other operations is relieved from standard/quality control requirements or any other similar requirements; provided that such merchandise is re-exported to other countries. 
• 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: Merchandise   entitled to export tax refund/exemption schemes when exported is still qualified for such schemes after it is removed into a Free Zone.

 
CONTACT
For further inquiry and information, you may contact

• the Customs Call Center at Tel. 1164
• the Customs Clinic at Tel. 02-667-7880-4, Fax. 02-667-7885, e-mail: customs_clinic@customs.go.th

Additional information may also be obtained from Customs ports of entry/exit. Please consult our telephone directory for a Customs office near you.  The listing can be found under the “CONTACT US” section.
 
4. BLUE CORNER
Tax compensation is one of the government measures to lower the production cost of goods for exportation to boost their worldwide competitiveness against foreign products both at international and domestic levels.  The compensation has to be complied with the criteria and conditions as prescribed by the Tax and Duty Compensation of Exported Goods Produced in the Kingdom Act B.E.2524 (1981).
 
ELIGIBLE APPLICCANTS

• Manufacturers of goods in Thailand; or
• Trading agents of exported goods which are produced in Thailand and then exported.

ELIGIBLE GOODS

1. Goods manufactured in Thailand; that is the assembly, conversion, transformation or any process to create the goods regardless of the methods.
2. Goods exported under the Customs Act or the goods sold in the country to the government agencies or state enterprises under the loan projects or foreign aids and the goods sold to international organizations or other organizations with the right to import such goods into Thailand with tax and duty exemption under the Customs Tariff Decree.  The exportation of goods to a foreign country must be complied with Customs laws. In addition, the payment of such goods must be settled with the foreign country.  The exports for any other purpose than commercial transaction are not eligible for tax and duty compensation.
3. Goods allowed by the Committee for tax and duty Compensation on the Exports Manufactured in Thailand to be eligible for tax compensation
4. Goods not granted duty drawback or exemption under either of the following laws:

• Duty drawback under Section 19 bis of the Customs Act (No.9) B.E.2482;
• Duty exemption under the manufacturing bonded warehouse type implemented according to the Customs Act B.E.2469
• Duty exemption under the export processing zone scheme implemented according to the Industrial Estate Authority of Thailand Act B.E.2522
• Duty exemption or concession under the Investment Promotion Act B.E.2520, except that duty exemption or concession on machinery
• Duty exemption under the free zone scheme implemented according to  Section 10 bis of the Customs Act (No.18)  B.E.2453

NON-ELIGIBLE GOODS

1. Goods exported as samples or for laboratory analysis.
2. Exported goods which are not manufactured in Thailand.
3. Minerals under the Mineral Act.
4. Goods subject to export duty or export fees.
5. Goods NOT allowed by the Committee for tax and duty Compensation on the Exports Manufactured in Thailand to be eligible for tax and duty compensation

 
CONTACT
For further inquiry and information, you may contact

• the Customs Call Center at Tel. 1164
• the Customs Clinic at Tel. 02-667-7880-4, Fax. 02-667-7885, e-mail: customs_clinic@customs.go.th. 

Additional information may also be obtained from Customs ports of entry/exit. Please consult our telephone directory for a Customs office near you.  The listing can be found under the “CONTACT US” section. 
 
5. BOI
Investment incentives have long been one of various measures applied by the Thai Government to attract foreign investment in Thailand and to support the Government goals in decentralizing Thailand's industrial base.  One key investment incentive set up by the Board of Investment (BOI), the agency directly responsible for investment promotion, is tax and duty incentives for promoted projects.  In this context, the Thai Customs Department, responsible for national revenue collection and promotion of exports, has set up regulations on importation of machinery and raw materials for entrepreneurs granted import tax and duty incentives from BOI.  To facilitate the entrepreneurs, Customs also provides advice on tax and duty privileges.             

Advantages of an Investment Promotion Scheme
(1) Relief from/Reduction of Import Taxes/Duties: Imported goods removed into Investment Promotion Zones shall be granted tax and duty privileges. This includes:

• Machinery: The machinery removed into the Investment Promotion Zones is either granted import tax and duty free allowance or 50 percent reduction of import taxes and duties, depending on the location of the zones. 
• Raw or Essential Materials: Raw or essential materials removed into the Investment Promotion Zones for manufacturing export products shall be exempted from import taxes and duties for 1-5 years, depending on the location of the zones.        

(2) Relief from Corporate Income Tax: Promoted projects shall be exempted from paying corporate income tax for 3 years, and in certain investment promotion zones, the relief shall be extended up to 7-8 years.
(3) Deduction of Transportation, Electricity and Water Costs: Promoted projects are entitled for double deduction from taxable income of transportation, electricity and water costs for 10 years from the date of first revenue derived from promoted activities.
(4) Deduction of Project’s Infrastructure Installation: Deduction can be made from net profit of 25 percent of the project's infrastructure installation or construction cost for 10 years from the date of first sales, and net profit for one or more years of any year can be chosen for such deduction. The deduction is additional to normal depreciation.
 
CONTACT
For further inquiry and information, you may contact

• the Customs Call Center at Tel. 1164
• the Customs Clinic at Tel. 02-667-7880-4, Fax. 02-667-7885, e-mail: customs_clinic@customs.go.th. 

Additional information may also be obtained from Customs ports of entry/exit.  Please consult our telephone directory for a Customs office near you.  The listing can be found under the “CONTACT US” section.


SOURCE : THE CUSTOMS DEPARTMENT