Thailand to Impose Duties on Low-Value Imports to Protect SMEs
Thailand is set to implement a new policy beginning next year that will directly impact low-cost imports previously enjoying tax exemption.
Finance Minister Ekniti Nithanprapas confirmed on Friday that the government plans to start collecting a 10% custom duty on these goods, a move strategically designed to protect the nation’s vulnerable small and medium-sized enterprises (SMEs) from being undercut by the influx of inexpensive foreign products.
Under the current regulatory framework, imported goods with a value of 1,500 baht or less are exempt from any import duties, while items exceeding that value are subject to varying tax rates based on their classification and type.
This system has allowed a significant volume of cheap imports, primarily originating from countries like China, to flood the Thai domestic market, leading to intense competition that local manufacturers have struggled to withstand.
The Finance Minister emphasized that the new measure, scheduled to come into effect on January 1 next year, will provide a necessary shield for the Thai manufacturing sector.
This action is viewed as critical governmental support aimed at leveling the playing field.
The government is also actively seeking collaboration from the operators of major online commercial platforms to streamline the process of collecting this new tax at the point of sale or entry, ensuring the policy’s effectiveness and wide-ranging compliance across the e-commerce landscape.
The Fundamental Shift in Trade Policy and Market Impact
The Finance Minister explicitly stated that the collection of these new customs duties will be used to protect SMEs from the proliferation of cheap imported goods flooding into the country, a phenomenon he linked directly to the ongoing global trade tensions and the search for new markets.
This measure is expected to have a far-reaching impact across several key domestic sectors, specifically affecting the e-commerce, logistics, and retail industries.
According to an analysis released by law firm Tilleke & Gibbins, the policy marks a “fundamental shift away from duty-free low-value cross-border e-commerce in Thailand.”
This change will inevitably place an additional administrative and processing burden on carriers and logistics operators.
These companies previously handled millions of non-dutiable small parcels with minimal paperwork but will now be required to implement new procedures for duty assessments and the official collection of the tax for every single consignment.
Last year, the previous government had already approved the collection of a 7% value-added tax (VAT) on this same category of cheap imported goods, a measure that was set to expire in December.
The current move to impose a 10% custom duty is a more aggressive and permanent step toward regulating the flow of low-cost foreign goods.
The unchecked influx of these highly competitive imports, primarily from China, has consistently undermined local manufacturing businesses, contributing to a worrying trend of factory closures and significant job losses across the country, prompting an urgent and vocal call for government intervention.
Protecting Local Industry Amidst Global Trade Challenges
The clamor from local businesses for government action highlights the severity of the challenge posed by high volumes of cheap imports.
The continued erosion of the local manufacturing base, characterized by a slew of job losses and factory shutdowns, clearly indicates that Thailand’s domestic businesses were operating at a significant disadvantage, unable to compete with the low pricing sustained by foreign competitors.
The government’s decision to enforce a 10% custom duty on low-value imports is a direct response to these economic pressures, prioritizing the health and sustainability of the domestic economy and its workforce.
This policy is a crucial pivot from a largely unregulated cross-border e-commerce environment to one with stronger protectionist measures designed to support local production and investment.
The successful implementation of this measure will hinge significantly on the cooperation of international and domestic e-commerce platforms, which act as the primary facilitators of these transactions.
Their assistance in accurately assessing and collecting the duty at the point of sale is essential to prevent circumvention and ensure the intended revenue and protective effects are realized.
Ultimately, this policy represents a strategic effort by the Thai government to navigate the complexities of global trade and leverage fiscal tools to shield its SME sector, ensuring that domestic industries can compete fairly and continue to contribute vital employment and economic stability to the country.
Financial Analyst Commentary: Rebalancing the Digital Trade Deficit and Supply Chain Resilience
The imposition of a 10% customs duty on low-value imports (below THB 1,500) represents a significant structural policy shift, moving Thailand toward parity with trading blocs like the EU, which eliminated similar de minimis customs exemptions to combat tax leakage and unfair competition.
This measure is not merely a revenue generator; it is an economic tool aimed at re-internalizing the negative externalities caused by unregulated cross-border e-commerce.
From a Finance perspective, the immediate impact will be felt in two areas: e-commerce platforms and logistics providers.
Platforms must now invest substantially in customs compliance technology and data sharing mechanisms, shifting the tax burden from the end-user to the point of sale, which may temper high-volume, low-margin digital imports and induce a short-term drop in cross-border e-commerce transaction volume.
For the Economy, the policy provides critical, albeit minor, protection to Thailand’s domestic SME manufacturing base.
The true long-term benefit is the incentive for local SMEs to digitize and improve quality, as the tariff only partially closes the cost gap.
It forces importers to internalize the customs cost, making locally-sourced goods relatively more price-competitive.
Regionally, this move signals Thailand’s growing assertiveness in managing its digital trade balance, particularly against imports from major regional hubs.
If successful, it establishes a precedent that other ASEAN countries struggling with cheap import flooding, such as Vietnam and Indonesia, may adopt to protect their nascent manufacturing bases, potentially leading to a more fragmented and regulated regional e-commerce landscape.
The policy fundamentally prioritizes local supply chain resilience and job preservation over the immediate cost savings previously enjoyed by consumers from duty-free digital imports.
