European Business Cautions Potential Trade Discrimination In Changes To Cigarette Excise Taxation Rules

19 January 2018, BANGKOK – The European Association for Business and Commerce (EABC) expressed concerns over continued issue about cigarette excise taxation and the reported new draft regulation being contemplated on new cigarette price, fearing unfair trade impact that may undermine foreign business’ confidence in Thailand.

Commenting on the recent news reports that such a new regulation is be considered by the Excise Department, which is also similar to the reported suggestion from the Thai Tobacco Monopoly, Mr. Stefan Teuchert, President of the EABC, stated that any new regulation requiring that tax base for cigarettes be the suggested retail price prevailing upon the date the new law entered into effect (16th September 2017) would be an unnecessary market interference, contradicting the principles of good governance and free market.

In the case of the European Union, one of the world’s leaders in tobacco control policy and where cigarettes are subject to a mixed system of excise taxation, it is officially recognized in the Council Directive 2011/64/EU that the tobacco taxation system needs to allow “freely formed prices”, and in practice the retail prices of tobacco products in the EU are freely set by business.

Mr. Teuchert reemphasized the principle of national treatment enshrined in Article III (national treatment) of the General Agreement on Tariffs and Trade (GATT), any internal taxes or regulations shall not be applied to afford protection to the domestic production. “We believe that the Thai Government has always abided by this commitment in designing and implementing an excise tax structure and related rules for any excisable goods to promote a level playing field in doing business in Thailand,” said Mr. Teuchert.