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Public Transportation: Thailand’s Draft Management of Joint Ticket System Act

Thailand’s transportation system, comprising both public and private operators, has long been plagued by inconsistent fare collection methods, creating a burden of complexity and inefficiency for its citizens. In response, the Office of Transport and Traffic Policy and Planning (OTP) under the Ministry of Transport (MOT) has introduced the Draft Management of Joint Ticket System Act B.E. …. (“Draft”). This aims to streamline public transport through a unified payment system and standardized fare rates, benefiting both citizens and operators. Public hearings for the Draft are open until 27 December 2024.

Key Issues of the Draft are as follows:

  1. Centralizing Technology Standards for Joint Tickets:
    • Goal: To ensure seamless integration across public and private operators.
    • Impact: To provide a consistent and efficient user experience for all passengers.
  2. Applying Uniform Fare Rates:
    • Goal: To eliminate fare discrepancies across different operators.
    • Impact:  To ensures fairness for citizens and promotes equal participation among operators.
  3. Promoting a Development Fund:
    • Goal: To support operators in transitioning to the joint ticket system.
    • Impact: To provide funding for initial setup and ongoing improvements and fostering innovation.
  4. Introducing Voluntary Licensing:
    • Goal: To incentivize operators to join the joint ticket system.
    • Impact: To offer financial and promotional support and encouraging collaboration across sectors.
  5. Enabling Enforcement through a Royal Decree:
    • Goal: To ensure critical operators align with the joint ticket system when necessary.
    • Impact: To maintain consistency and efficiency across the transportation network.
arial view photo of cars

Benefits of the Joint Ticket System

  1. Economic Growth:
    • Simplified fare systems are expected to boost public transport usage, leading to higher domestic revenue.
  2. Technological Advancement:
    • A unified infrastructure allows operators to adopt cutting-edge solutions, positioning Thailand as a regional leader in smart transit.
  3. Environmental Sustainability:
    • Enhanced public transport usage, reduces reliance on personal vehicles and thereby lowering greenhouse gas emissions.

Entrepreneurial Opportunities and Benefits

  1. Access to Funding:
    • The dedicated development fund offers financial support for innovation, system upgrades, and initial investments, reducing the financial burden on operators.
  2. Market Competitiveness:
    • Participation in the unified system allows private operators to expand their customer base and build trust through standardized services.
  3. Technology Integration:
    • Operators can adopt modern systems supported by the OTP, ensuring alignment with cutting-edge technological standards.
  4. Public-Private Collaboration:
    • The Draft encourages closer ties between public authorities and private operators, fostering long-term partnerships and mutual growth.

Conclusion

The Draft is poised to transform Thailand’s public transport network, creating significant opportunities for operators and offering greater convenience for citizens. By addressing inefficiencies, encouraging investment, and fostering collaboration, the Draft ensures sustainable growth and innovation to the country. Entrepreneurs stand to benefit from financial incentives, market expansion, and alignment with technological standards, making the win-win situation for all stakeholders. Through this initiative, Thailand solidifies its role as a forward-thinking leader in public transportation.

close up of people at a subway station entrance

Key Takeaways

  • Unified Ticketing System: Streamlines fare collection across all public transport modes.
  • Economic and Environmental Benefits: Increased public transport usage leads to economic growth and reduced emissions of greenhouse gas.
  • Support for Operators: Financial and technological support for operators to integrate into the new system.
  • Public-Private Partnerships: Enhanced collaboration between public authorities and private operators.

Author: Panisa Suwanmatajarn, Managing Partner.

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Tax System Reform: Thailand Adopts Pillar 2 in New Draft Emergency Decrees

Introduction

Thailand is actively pursuing membership in the Organisation for Economic Co-Operation and Development (“OECD”) to foster economic and social development and enhance its global standing. As part of this effort, Thailand is aligning its tax system with OECD standards by adopting Pillar 2. Pillar 2 comprises tax rules implemented by the OECD to prevent Multinational Enterprises (“MNEs”) from avoiding higher tax rates by shifting profits to low-tax jurisdictions.

Pillar 2 applies to MNEs whose consolidated financial statements show annual profits of €750 million (approximately THB 28 billion) or more. It imposes a 15% global minimum tax rate on MNEs’ profits, known as the “Top-up Tax.”

Two New Drafts for the Implementation of Pillar 2

To implement these rules, Thailand must enact domestic legislation to create a concrete legal framework for public compliance. Due to time constraints, Thailand is expediting the implementation process through emergency decrees rather than regular legislative acts. On 11 December 2024, the Cabinet approved two draft emergency decrees which are:

  1. The Draft Emergency Decree on Top-up Tax B.E. …. proposed by the Ministry of Finance: This draft outlines the rules and procedures for collecting top-up tax from legal entities within MNE groups whose consolidated financial statements show total revenue of at least €750 million (approximately THB 28 billion).
  2. The Draft Emergency Decree Amending the National Competitiveness Enhancement for Targeted Industries Act (No. ..) B.E. …. proposed by the Board of Investment: This draft amends existing law to address Pillar 2 by introducing measures to regulate the utilization of both tax and non-tax benefits.
accountant counting money

Both drafts will be submitted to the Office of the Council of State for detailed review. Upon approval, they will be proposed to the Cabinet again and then to the House of Representatives. The public will be notified of the final versions before they become effective, with enforcement projected for 2025. These changes are expected to generate additional government revenue, ensure fair competition, and provide clearer guidelines for investors regarding their tax responsibilities.

Conclusion

Thailand is taking a significant step toward aligning its tax system with global standards. By adopting the OECD’s Pillar 2, Thailand aims to create a more equitable tax environment. The implementation through draft royal decrees introduces top-up tax and measures to regulate tax and non-tax incentives for targeted industries. These changes will contribute to a more level playing field for businesses, attract foreign investment, and ensure MNEs pay their fair share of taxes. The implementation is expected to strengthen Thailand’s economic competitiveness and sustainable development. Stakeholders should closely monitor the draft emergency decrees to prepare for the new laws taking effect in 2025.

Key Takeaways

  • Thailand is implementing the OECD’s Pillar 2 through 2 emergency decrees as part of its accession for OECD membership.
  • The new tax framework applies to MNEs with annual consolidated revenues of €750 million or more.
  • Key measures include:
    • Introduction of a 15% global minimum tax rate
    • New regulations for tax and non-tax benefits of Board of Investment’s targeted industries
    • Enhanced monitoring of tax compliance for large MNEs
  • Timeline for Implementation:
    • Cabinet’s approval was obtained on 11 December 2024
    • Currently under review by the Office of the Council of State
    • Expected enforcement to begin in 2025
  • Business Impact:
    • Affected companies will need to reassess their tax planning strategies
    • Increased tax transparency requirements
    • Potential adjustments to investment structures and corporate operations
  • For companies operating in Thailand, it is crucial to:
    • Monitor regulatory updates
    • Review current tax structures and benefits
    • Prepare internal systems for compliance with the new requirements
    • Consider seeking professional advice for tax planning under the new regime

Author: Panisa Suwanmatajarn, Managing Partner.

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BOI: New Regulations Governing Land Ownership for Foreign Juristic Persons

On 9 December 2024, the Board of Investment (BOI) enacted Notification No. 16/2567, establishing new criteria for granting permission to promote foreign juristic persons to own land for office and residential purposes. This notification supersedes the previous Notification No. 6/2565, which had been in effect since 2022.

The Investment Promotion Act B.E. 2520 (1977) grants special privileges to BOI-promoted businesses, allowing foreign entities to own land beyond the limitations imposed by general land laws. This amendment aims to facilitate business operations while enhancing clarity and flexibility in the regulatory framework.

Key Provisions of the Amendment

  1. Eligibility
    • Foreign juristic persons with a minimum paid-up registered capital of 50 million baht are eligible to own land.
  2. Land Ownership Limits
    • Office Use: Up to 5 rai.
    • Residential Use: Up to 20 rai for constructing accommodation specifically for operational-level employees in a building form.
    • Land designated for office and residential use may be located within or outside the same area as the business premises.
  3. Special Considerations
    • The BOI may grant exceptions on a case-by-case basis if special reasons or necessities arise.
  4. Land Disposal
    • Foreign juristic persons must dispose of or transfer the land within one year after ceasing to qualify for investment promotion.
  5. Further Regulations
    • The BOI Office has the authority to issue additional criteria such as the type of business, distance from the business site, and residential unit specifications.
birds eye view of a cityscape

Key Amendments from the Previous Notification

  1. Repeal of Provisions for Executive and Expert Accommodation
    1. Clause 1.2 of the previous notification, which allowed land ownership for accommodation of executives and experts, has been repealed.
  2. Restriction on Residential Use
    1. Land ownership for residential purposes is now limited to the construction of accommodation exclusively for operational-level employees, replacing the broader term “workers”.
  3. Supplementary Regulations
    1. Additional criteria will be issued to provide further clarity on business types, land specifications, and proximity to business operations, ensuring compliance with operational and environmental requirements.

Conclusion

This announcement takes effect immediately. Supplementary regulations may be further issued, so promoted enterprises are encouraged to stay informed of any subsequent notices to ensure compliance with the regulations.

Author: Panisa Suwanmatajarn, Managing Partner.

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Data Privacy: Criminal Penalties Imposed by the Court Raise Concerns of Practice

Recent decisions by the Phuket Provincial Court have garnered significant attention from data privacy practitioners. These rulings have highlighted critical issues concerning the enforcement of Thailand’s Personal Data Protection Act (PDPA) and its implications for criminal penalties.

Overview of the Cases

In two related cases, the offenders allegedly obtained personal data from online gambling platforms and advertised the sale of this data on social media. The personal data involved includes names, phone numbers, email addresses, and account identification numbers. The offenders were found guilty under several laws, including the Computer-Related Crime Act, the Gambling Act, the PDPA, and the Penal Code.

Application of Section 80 of the PDPA

A notable aspect of these decisions is the application of Section 80 of the PDPA, which was used as a basis for determining the punishments for the offenders. Section 80 states:

“Any person who comes to know the Personal Data of another person as a result of performing duties under the PDPA and discloses it to any other person shall be punished with imprisonment for a term not exceeding six months, a fine not exceeding Baht five hundred thousand, or both.”

The court’s interpretation of Section 80 is significant as it expands the enforceability of criminal sanctions and imprisonment to conduct beyond the violation of sensitive personal data outlined in Section 79 of the PDPA. Traditionally, Section 80 was thought to apply only to competent officials who disclose personal data learned while performing their duties under the PDPA. Consequently, the elements of damages and intention were not included in the legal text.

However, the court’s decisions to criminalize the two offenders under Section 80 allow for general data controllers to face imprisonment penalties. This interpretation could lead to broader applications of criminal sanctions, moving beyond just sensitive personal data violations under Section 79 of the PDPA, which requires specific elements such as intention and damages for enforcement.

a stainless steel handcuff

Analysis of Sections 79 and 80 of the PDPA

Section 79 of the PDPA focuses on the unauthorized disclosure of sensitive personal data. For a violation occurring under this section, there must be elements of intention and resultant damages. The penalties under Section 79 are designed to address severe breaches involving sensitive data, emphasizing the need for intention and actual harm.

Section 80, on the other hand, addresses the unauthorized disclosure of personal data in a broader sense. Initially, it was interpreted to apply primarily to officials handling personal data as part of their duties. The court’s recent rulings have expanded this interpretation, suggesting that any data controller could be subject to criminal penalties for disclosing personal data, even if the data is not classified as sensitive and without the traditional elements of intention and damages.

Implications and Future Developments

This shift in interpretation has sparked debate among scholars and data privacy practitioners regarding its appropriateness. Some argue that expanding the scope of Section 80 to include general data controllers could lead to excessive criminalization, while others believe it is necessary to enhance data protection enforcement.

In response to these developments, the Ministry of Digital Economy and Society is pushing to increase penalties for the illegal trading of personal data. They propose raising the maximum imprisonment term from one year to five years by amending the Royal Decree on Measures to Prevent and Suppress Technology Crimes B.E. 2566 (2023). A draft amendment to the Royal Decree is currently under consideration by the Council of State and is expected to be submitted to the Cabinet for further review and approval soon.

These court’s rulings, being those of the court of first instance, signify a potentially transformative period for data privacy enforcement in Thailand, with significant implications for data controllers and practitioners alike.

Author: Panisa Suwanmatajarn, Managing Partner.

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Waste Management: Bangkok Strengthens Regulations to Enhance Sustainability

Bangkok Metropolitan Administration initiated a public hearing on a new draft regulation aimed at improving waste management at the source. This regulation addresses the city’s growing waste problem by closing gaps in current practices and setting clear, sustainable standards.

Applicability

The draft regulation will apply to:

  • Restaurants and places for preparing, storing and selling food and beverages
  • Shopping malls and department stores
  • Hotels
  • Educational institutions (schools, colleges and universities)
  • Government offices and state enterprises
  • Markets
  • Large buildings producing over 2 cubic meters of waste daily
  • Residential buildings with 80+ rooms or over 4,000 square meters of usable space
  • Industrial plants
  • Land developers or juristic persons of housing estates

Waste Separation Requirements

Businesses must separate waste into four categories:

  • Organic Waste: Food scraps, garden waste, and other biodegradable materials, which should be composted or processed to reduce landfill waste.
  • Recyclable Waste: Plastics, paper, glass, and metals, which should be sorted cleanly to support recycling and conserve resources.
  • Toxic/Hazardous Waste: Batteries, chemicals, and e-waste, which must be stored and disposed of properly to avoid environmental and health risks.
  • General Waste: Non-recyclable materials that must be managed responsibly to minimize their impact.
recyclable glass items in a box

Key Waste Management Guidelines

To comply with the new regulation, businesses must implement the following management measures:

  • Storage: Provide safe, secure, and well-ventilated waste storage areas that can handle the volume of waste generated.
  • Collection and Disposal: Use appropriate methods for non-separable waste to avoid pollution and health hazards.
  • Leachate Management: Ensure proper collection and treatment of leachate to prevent contamination.
  • Pest Control: Implement measures to prevent infestations and maintain cleanliness.
  • Compliance: Follow all local and national regulations to avoid penalties.

Implications for Affected Businesses

Businesses such as hotels, educational institutions, shopping malls, department stores, and industrial plants will need to invest in waste management systems. Hotels and educational institutions must designate areas for composting organic waste and ensure that recyclable materials like plastics and glass are sorted. Shopping malls and department stores will need to set up waste storage and disposal systems to manage large volumes of waste. Industrial plants may require specialized methods for handling hazardous waste. Compliance will require ongoing monitoring, and businesses may need to engage in specialized waste management services.

aerial view of industrial recycling yard in chattanooga

Key Takeaways

  • Wide Reach: The regulations affect many types of businesses and residential buildings.
  • Mandatory Waste Separation: Businesses must separate waste into organic, recyclable, hazardous, and general categories.
  • Defined Disposal Standards: Clear guidelines for waste storage, collection, and disposal ensure better waste management.
  • Sustainability Focus: These regulations aim to reduce waste, promote recycling, and move Bangkok toward sustainability.
  • Increased Responsibility: Businesses must take proactive steps to comply and avoid penalties.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand’s Social Security Reform

On 1 December 2024, the Social Security Office (SSO) under the Ministry of Labor opened a public hearing to gather feedback on a draft Ministerial Regulation aimed at replacing Ministerial Regulation No. 7, which has been in effect since 1995. The proposed regulation introduces changes to the minimum and maximum wage bases used for calculating contributions to the Social Security Fund (SSF). The goal is to ensure that the regulation reflects current economic conditions and enhances benefits for insured individuals. Ministerial Regulation No. 7 (1995) set the wage base for insured individuals under Section 33 at a minimum of 1,650 THB per month and a maximum of 15,000 THB per month.

Proposed Changes to the Wage Base

To adapt to current economic conditions and improve benefits, the SSO proposes gradual adjustments to the wage base as follows:

  • 1 January 2026 – 31 December 2028:
    • Minimum: 1,650 THB/month
    • Maximum: 17,500 THB/month
  • 1 January 2029 – 31 December 2031:
    • Minimum: 1,650 THB/month
    • Maximum: 20,000 THB/month
  • From 1 January 2032 onwards:
    • Minimum: 1,650 THB/month
    • Maximum: 23,000 THB/month

These adjustments will result in higher contributions from both employers and employees but will also lead to enhanced benefits for insured individuals. The increase in the wage base will gradually improve benefits across various categories.

Employer’s Obligations under the Social Security Act

Under Thailand’s Social Security Act, employers are required to deduct contributions from employees’ wages and contribute an equal amount to the SSF on behalf of their employees. Non-compliance, such as failing to register employees or remit contributions, may lead to fines or legal action. Compliance ensures employees’ financial security.

Key Takeaways

  • Purpose: To align with the current economic situation and improve benefits for insured persons.
  • Changes: Increased wage ceiling, higher contributions, and increased benefits.
  • Benefits: Increased compensation for sickness, maternity, disability, death, unemployment and higher pension.
  • Implementation: Gradual increase in wage ceiling over several years.

Author: Panisa Suwanmatajarn, Managing Partner.

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Labor: Legal Consideration for Employment Termination

Disclaimer:
This article provides a general legal framework for employment termination in Thailand. It is important to note that specific industries, professions, or situations may be subject to additional or different regulations. If a matter in question is governed by specific legislations, those particular laws and regulations must be considered in addition to the general principles outlined here.


Introduction:
Employment termination is a critical aspect of workforce management that requires careful consideration of legal and ethical factors. In Thailand, the Labor Protection Act B.E. 2541 (1998) provides the primary framework for lawful employment termination, balancing the rights of employers and employees. This article explores the key aspects of employment termination under Thai labor law, focusing on contract types, compensation requirements, and legal protections for both parties. Types of Employment Contracts and Termination Procedures:

The Labor Protection Act B.E. 2541 (1998) recognizes two primary types of employment agreements:

1. Fixed-Term Contracts

    • Termination occurs automatically upon contract expiration.
    • Early termination by the employer requires written notice.
    • Premature termination without cause may result in a breach of contract penalties.

    2. Non-Fixed Term Contracts

      • Termination requires written notice prior to or on the wage payment date and will be effective on the following payment date.
      • Notice period should not exceed three months unless specified otherwise in the contract.

      For both contract types, failure to provide proper notice obliges the employer to pay compensation in lieu of notice and salary until the effective termination date. Additional contractual obligations, such as repatriation expenses, must also be honored.


      Compensation for Termination Without Cause:
      When an employer terminates an employee without the employee committing any offense specified by law or contract, the Labor Protection Act B.E. 2541 (1998) mandates severance pay. The amount is calculated mainly on the employee’s length of service.


      In cases of contract breach before expiration without the employee’s fault, employers must pay damages. Failure to provide advance notice also requires compensation in lieu of notice.

      Source: International Business Newsletter December 2024 (antea-int.com)

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      Telemedical Services: Navigating the Digital Healthcare Frontier

      With the integration of technology into virtually every aspect of life, it is undeniable that the medical sector also requires technological innovations to reform traditional medical practices. This transformation necessitates close monitoring and regulation to ensure that service recipients are well protected—not only in terms of health and safety but also in safeguarding their personal information and privacy. The Ministry of Public Health recognizes the importance of establishing standards for both public health services and private telemedical service providers to ensure that telemedical services are efficient, convenient, fast, safe, standardized, verifiable, and in line with the principles of good governance. As a result, the Ministry has issued the Announcement on the Service Standards for Telemedical Service Providers and Telemedicine Public Health Services (the “Announcement”).

      Under the Announcement, Telemedical Services refer to the provision of medical consultation, examination, diagnosis, treatment, nursing, disease prevention, health promotion, and physical rehabilitation remotely, using a digital system to transmit audio and video data.

      The Announcement outlines the criteria required for telemedical service providers and the systems they use. Some of these criteria are:

      • There must be a sufficient number of medical practitioners to provide telemedical services without disrupting normal operations at each medical establishment.
      • There must be a registration and identity verification process for both service recipients and providers. This system must comply with the standards prescribed by the Electronic Transactions Development Agency and the Digital Development Agency.
      • A communication system must be established between service recipients and providers. This system must be integrated with identity verification and appointment scheduling in an appropriate manner.
      • Date, time, medical reports, verification results, and other relevant information must be recorded in audio, picture, text, or video format.
      • A process must be in place to explain the details, procedures, potential effects, and risks to the service recipient before telemedical services are provided, including obtaining consent.
      • A document, manual, or guideline for providing telemedical services must be created, in accordance with the standards set by the Office of Permanent Secretary, Ministry of Public Health.
      • Telemedical services must include the delivery of medicines and medical supplies to patients’ house.

      Although detailed criteria for each qualification are yet to be fully outlined, this Announcement effectively serves as a checklist for telemedical service providers to assess whether their systems align with the regulated standards.

      It is recommended that the telemedical service providers conduct comprehensive internal audits, develop adaptive compliance strategies, maintain flexible operational frameworks, and anticipate future regulatory refinements.

      Author: Panisa Suwanmatajarn, Managing Partner.

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      Reforming Industrial Licensing: New Approach to Factory Regulation and Environmental Compliance

      Introduction:

      The Department of Industrial Works (DIW), Ministry of Industry in Thailand has initiated a comprehensive reform of industrial licensing and factory management processes, signaling a significant shift towards more stringent environmental and operational standards. This strategic approach aims to enhance industrial governance, protect environmental interests, and promote responsible business practices.

      Key Regulatory Reforms:

      Licensing Mechanism Transformation

      The DIW has implemented a multi-faceted approach to industrial licensing that focuses on:

      1. Streamlined Approval Processes
        • Simplifying factory operation permit issuance
        • Reducing administrative procedures
        • Accelerating permit processing times
      2. Merit-Based Support System
        • Prioritizing and supporting responsible industrial operators
        • Providing expedited consultations and services
        • Creating preferential pathways for compliant businesses

      Blacklist Mechanism for Non-Compliant Operators:

      The DIW will establish a comprehensive blacklist targeting industrial operators with problematic histories, including:

      • Companies with previous legal violations
      • Entities with environmental pollution records
      • Operators exceeding standard emission levels
      • Businesses with improper industrial waste management
      • Entities previously ordered to implement corrective measures
      man walking on roof top

      Rigorous Evaluation Criteria:

      Blacklisted operators will undergo extensive scrutiny, including:

      • Historical operational performance assessment
      • Facility location analysis
      • Machinery installation review
      • Production safety protocols
      • Pollution treatment system standards
      • Waste management efficiency
      • Legal compliance verification

      Focus on High-Risk Industrial Sectors:

      Special attention will be directed towards high-risk industrial categories, particularly those involved in waste treatment and processing, such as:

      • Slag melting facilities
      • Industrial waste management plants (Categories 101, 105, 106)
      • Hazardous and non-hazardous waste processing facilities
      • Electronic waste recycling units
      • Chemical waste treatment centers

      Regulatory Objectives:

      The reforms aim to achieve the following strategic goals:

      1. Ensure clean and transparent industrial establishment processes
      2. Promote environmentally friendly industrial growth
      3. Balance economic development with social and environmental considerations
      4. Create a sustainable industrial ecosystem

      Implementation Strategy:

      The DIW will:

      • Reduce administrative bottlenecks
      • Implement strict review protocols
      • Provide clear guidelines for industrial operators
      • Maintain transparent monitoring mechanisms
      • Enforce rigorous compliance standards

      Key Takeaways:

      1. Proactive Regulatory Approach: Thailand is transitioning from reactive to proactive industrial regulation.
      2. Environmental Priority: Protecting ecological systems and community health is paramount.
      3. Operator Accountability: Businesses must demonstrate responsible practices to maintain operational licenses.
      4. Transparent Governance: All processes will be open to public scrutiny and systematic review.

      Conclusion:

      These reforms represent a significant milestone in Thailand’s industrial policy, demonstrating a commitment to sustainable development, environmental protection, and responsible business practices.

      Author: Panisa Suwanmatajarn, Managing Partner.

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      Ministry of Finance: Update on Excise Tax in the Fields of Public Health, Environmental and Economic

      On November 5, 2024, the Deputy Minister of Finance presented key policies to the Excise Department, emphasizing its crucial role in driving the transformation of the country’s economic structure, environmental sustainability, and public health. This will involve in studying new tax collection mechanisms, continuing the existing mechanisms, and adjusting the tax collection system to achieve such goals. The policy primarily focused on 3 key areas – health-related tax, environmental-related tax, and economic-related tax. The details are as follow:

      1.Heath-Related Tax

      • Fat Tax Consideration: The Excise Department was advised to consider taxation mechanism for the fat tax to combat rising rates of fat consumption which are linked to increase a burden healthcare cost. The fat tax will be collected based on the type of fat in foods and products.
      • Expanding the Scope of Sodium Tax: Thailand’s current sodium tax will mainly target at four main product groups (i.e., instant noodles, frozen foods, snacks, and sauces). The policy is suggested to impose a sodium tax on products outside the current controlled lists, and prioritizing items with high sodium levels while considering the accessibility of essential goods for low-income individuals which will be calculated based on the level of saltiness.
      • Approving of the 4th Phase on the Sugar Tax: The sugar tax was implemented to encourage beverage manufacturers to reduce sugar content in 2017, in order to provide businesses and consumers time for adapting to the potential increases of the price, the sugar tax will be implemented into 4 phases which step-up system with rates increasing every 2 years. The implementation of sugar tax is currently in the 3rd phase, and the sugar tax has been approved for the 4th phase, commencing on April 1, 2025. This progressive approach aims to achieve the goal of reducing sugar content in packaged beverages.
      • Tobacco Tax System Development: Thailand’s tobacco tax structure consists of 2 main types: (1) a blended tax which considering both value and quantity, and (2) a single-rate tax which specific rate taxes, The policy requires the implementation of a blended tax system for tobacco product while stipulating the development of a single-rate tax system that aims to reduce price distortions, boost market competition, support local tobacco farmers, and increase government revenue.
      • Track & Trace system for Tobacco Products: Previously, Thailand’s tobacco verification system relied solely on stamps to confirm tax payment, with information accessible only to the Excise Department and manufacturers. To enhance transparency and traceability, a QR code tracking system has been implemented and enforced. This new system facilitates the process of verification, including allows the public to independently monitor product authenticity.

      2. Environmental-Related Tax

      • Establishment of Carbon Pricing Mechanism: The Excise Department was advised to establish a carbon pricing mechanism in the excise tax on 6 different types of oil products to reduce the emission of Carbon dioxide gas from both the public and business operators. The initial carbon price is set at 200 baht per ton of carbon.
      • Reconsideration of Tax Rate for Battery Products: Currently, the tax rate for battery products is set to be at the rate of 8% for all types of batteries according to Ministerial Regulation regarding the Excise Tax Tariff Rates B.E.2560 (2017). However, the tax rate will be changed into a tiered tax system considering the characteristics of the batteries such as life cycle, weight, types, and energy used.
      white smoke coming out from a building

      3. Economic-Related Tax

      • Investment Incentive for Automobile Industry: The policy using tax incentives to attract investment in the domestic automotive industry, particularly for Plug-in Hybrid Electric Vehicle (PHEV), Battery Electric Vehicle (BEV), Fuel Cell Vehicle (FCEV) vehicles, and Hybrid Electric Vehicle (HEV) while maintaining the production base for Internal Combustion Engine (ICE). However, to support long-term restructuring, the policy will be exposed to short-term revenue losses.

       Strategic Objectives:

      1. Promote preventive healthcare
      2. Modify consumer behavior
      3. Support environmental sustainability
      4. Drive economic transformation
      5. Ensure balanced revenue collection

      Implementation Considerations:

      • The phased approach to allow business adaptation
      • Targeted reduction of sodium consumption by 30% by 2025
      • Collaborative approach with relevant government agencies

      Conclusion

      The November 2024 excise tax policy update represents a sophisticated, multi-dimensional approach to addressing national challenges through strategic tax mechanisms, balancing public health, environmental sustainability, and economic development.

      Recommended Actions for Stakeholders:

      • Invest in product reformulation
      • Review current product portfolios
      • Assess potential tax implications
      • Develop adaptation strategies
      • Engage with regulatory authorities

      Author: Panisa Suwanmatajarn, Managing Partner.

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