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).
- Manufacturers of goods in Thailand; or
- Trading agents of exported goods which are produced in Thailand and then exported.
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.
4. Goods allowed by the Committee for tax and duty Compensation on the Exports Manufactured in Thailand to be eligible for tax compensation
5. 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
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
Exporters prepare the Export Declaration and follow the requirements of the e-Export system. Additional details can be studied from the Notification of Customs No.39/2550 Subject: Manual of Export Customs Procedures in e-Export System. It is essential that the exporters submit the request for tax and duty compensation at the Duty Compensation Sub-Division, Tax and Duty Incentive Bureau within ONE year from the date of exportation.
The minimum documents required to export the goods under the tax and duty compensation scheme are as listed below:
- Application form for tax and duty compensation on exported goods (Kor Sor Kor 20/1)
- A form containing details of goods (Form Kor Sor Kor 20/1 Kor). Please note that only 10-100 export declarations are allowed to be attached to one application. In case where the export declaration is more than 100, another separated application is required.
- A credit Note/Credit Advice
- An invoice
- A request for transferring a tax coupon (Form Kor Sor Kor 22/1) if the tax coupons are transferred
- A tax invoice if the tax coupons, belonged to the exporter who are not the same person as the manufacturer, are transferred and the rate of tax and duty compensation on the exports is more than 1.5%
- An airway bill (if goods are exported by air)
- An attachment (Form Kor Sor Kor 162), certified by the Thai Frozen Food Association, indicating the quantity of domestic tiger prawns if the exporter intends to claim for tax and duty compensation for such domestic tiger prawns
- Certification of company’s registration issued by the Ministry of Commerce for the first-time applicant
The minimum documents required in case where the imports are sold, in Thailand, to the government agencies or state enterprises under the loan projects or foreign aids which are eligible for tax and duty compensation are as listed below:
- Application form for tax and duty compensation on exported goods (Form Kor Sor Kor 21/1 Kor)
- A copy of the sales contract, only the part concerning the goods eligible for tax and duty compensation. If it is in a foreign language, a translation into Thai language is required.
- A copy of the certification of the sales contract from the relevant government agencies or state enterprise indicating that the sales of goods are under the loan projects or foreign aids and that the seller is selected from international bidding.
- Certification of goods inspection or a copy of goods acceptance report issued by the Committee on the Inspection of the Quality and Quantity of Goods from the government agencies or state enterprises.
- A copy of invoices issued by the manufacturers and a corresponding copy of the sales receipt which are duly signed by the applicant with the company seal.
The application for tax and duty compensation under this scenario shall be submitted within 1 year from the date the Committee on the Inspection of the Quality and Quantity of Goods inspects and accepts the goods or within 1 year from the date the Committee inspects the goods in each cycle.
Extension of Time Limit for Filing the claims
To facilitate business operators in Thailand, Thai Customs extends the time limit for filing the claim for the tax and duty compensation by relaxing the stipulations in the aforementioned regulations, provided that the claims are brought before Customs with reasonable ground. In case where the applicants are unable to claim for tax and duty compensation within 1 year from the date of exportation, the applicant shall submit the request for extension of the time limit (Form Kor Sor Kor 159) to Customs. The one-year time limit is extended for 2 months at a time but not more than 3 times in total.
To collect the tax coupons issued by Customs, the business operators can contact the Tax Coupon Section at the Customs Headquarters. The followings documents are required:
- A request form of tax and duty compensation (Form Kor Sor Kor 123)
- Authorizing/authorized person with an identification card
The tax coupons are valid for three years from the date of issuance. However, further three-year extension at a time may be granted, but the total request must not more than two times. The request for extension must be submitted to Customs at least 7 days prior to the expiry date.