Cigarette Prices to be Driven Up by New Laws
22 March 2011
Two tobacco tax valuation bills will be considered by the cabinet tomorrow. The bills are estimated to cause the retail prices of cigarettes to increase.
One bill would suggest that taxes be calculated from the retail prices of cigarettes instead of the ex-factory prices of the state enterprise Thailand Tobacco Monopoly for local cigarettes and the CIF (cost, insurance and freight) prices of imported cigarettes.
The use of the retail prices is thought to be easier and to result in fewer disputes.
The Second bill will establish minimum CIF prices to prevent cigarette importers from declaring prices that are too low so that they may reduce their taxes.
The recent suggested changes follow on the heels of long-running disputes between US tobacco company Phillip Morris and Thai authorities. A complaint was filed against Thailand with the World Trade Organization (WTO) by the Philippines-based location for Philip Morris in the region, stating that Thailand violated the 1994 General Agreement on Tariffs and Trade (GATT) in regards to valuation methods for Thai customs and value-added taxes on cigarettes imported from the Philippines-based plant.
Thailand responded by stating that the company understated the import prices. Under the WTO, a member country must follow the GATT valuation, which is determined by an importer when calculating customs tax. The WTO ruled in favor of Phillip Morris in November 2010, after which Thailand filed for an appeal. |