Thailand considers imposing 7% VAT on Chinese goods under $40 to protect local businesses. China is Thailand’s top trade partner with investments in various sectors.
Thai Government Considers Imposing VAT on Chinese Goods
The Thai government is contemplating enforcing a seven percent value-added tax on Chinese products priced below 1,500 baht (US$40) that are funneled through Thailand’s free trade zones to safeguard local businesses affected by an influx of inexpensive imports. Presently, goods under the 1,500 baht value are exempt from duties and VAT.
Impact of Chinese Imports on Local Industry
The Federation of Thai Industries has asserted that Chinese imports have led local manufacturers to reduce production by approximately 50 percent. Moreover, data from the Bank of Thailand shows that imported consumer goods comprised 24 percent of total imported goods in the first quarter of 2023, with 9.1 percent originating from China.
Implications on Thailand-China Relations
The introduction of tariffs on Chinese imports could potentially affect bilateral relations, given that China is Thailand’s largest trade partner. With bilateral trade hitting US$135 billion in 2023, Chinese investment and technology transfer have greatly benefited Thailand’s industrial growth, especially in its pursuit to become a regional EV hub. Additionally, Thailand heavily relies on Chinese tourism revenue, with Chinese tourists constituting the largest group of visitors prior to the pandemic, making up about a quarter of the 40 million arrivals in 2019.
Source : Thailand is considering implementing protective tariffs on imports from China