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Securing Your Import/Export License in Thailand

Import/Export License in Thailand

Securing Your Import/Export License in Thailand

Thailand serves as a major gateway for international trade due to its strategic location in Southeast Asia. This guide provides exhaustive details on obtaining an import/export license in Thailand, covering legal frameworks, tax regulations, and procedural requirements. Ideal for both local entrepreneurs and foreign investors, this guide aims to streamline the complex process of business registration and operation in Thailand.

Table of Contents

Overview of licensing and compliance for import/export licence in Thailand

Navigating the import/export licensing requirements is essential for businesses involved in the import and export of goods in Thailand, ensuring compliance with local safety and quality standards. Below is a concise summary of the key licenses and compliance processes:

1. Import/Export License

  • Requirement: Mandatory for all businesses, especially those dealing with controlled goods such as electronics, food, and chemicals.

  • Authority: Issued by the Thai Customs Department, which verifies compliance with safety and quality standards.

  • Process:
    1. Documentation: Submit business registration, proof of address, and goods descriptions.
    2. Inspections and Audits: Required for certain goods to ensure compliance.
    3.  Timeline: Processing generally takes a few weeks; apply in advance to accommodate potential delays.

2. Specific Product Licenses

  • Regulated Items: Includes pharmaceuticals, agricultural products, and cosmetics.
  • Authorities:
    • Thai FDA: Oversees licensing for food, pharmaceuticals, and cosmetics, ensuring safety and regulatory compliance.
    • Ministry of Agriculture: Manages licenses for agricultural products.
  • Process:
    1. Testing and Approval: Rigorous testing is required, including clinical trials and lab tests.
    2. Documentation and Review: Submit detailed product information and undergo a thorough review process.
    3. Compliance Monitoring: Continuous compliance with regulations is necessary after licensing.

What are the tax laws and customs duties for this license? 

Before looking at the process of how to register for the import and export licence, it is important to navigate the tax laws and customs duties when conducting import/export activities in Thailand. Businesses must be well-informed of the varying tax obligations and how they affect the importation and exportation of goods to optimize operations and ensure compliance.

  1. Value-Added Tax (VAT)

  • VAT is applied at 7% on goods and services within Thailand and on imported goods. Exports are zero-rated, which means exporters can claim refunds on VAT paid on inputs.
  • The administration of VAT is outlined under the Thai Revenue Code, which provides the framework for tax collection and enforcement.

  1. Customs Duties

  • HS Code Classification: Import duties are determined based on the Harmonized System (HS) classification of products.
  • Impact of Free Trade Agreements (FTAs): Thailand’s numerous FTAs can significantly reduce import/export duties, depending on the origin and destination of goods.

  1. Excise Tax

  • This tax is levied on specific luxury and health-related goods such as tobacco, alcohol, and vehicles.
  • Rate may vary by product type, generally a percentage of the cost, insurance, and freight (CIF) value or a specific amount per unit.

  1. Corporate and Withholding Taxes

  • Corporate Income Tax: Standard rate is 20%, but reduced rates and exemptions may apply under various incentive schemes.
  • Withholding Tax: Applicable on payments made to non-residents for services provided in Thailand. Rates vary based on the nature of the service and tax treaties.

Import and export license in Thailand for foreigners under the FBA

Most goods and products are not included in the prohibited or heavily restricted categories under List Three of the Foreign Business Act. This allows foreigners to import and export these items freely, as they are not subject to the stringent limitations that the Act imposes on other business activities. Listed below are the goods foreign entities can import and export in Thailand:

  • General Consumer Goods:

    Apparel, furniture, home appliances, and electronics.
    • Regulation: No specific restrictions under the FBA; standard customs procedures apply.

  • Industrial and Construction Materials:

    Steel, machinery, and construction equipment.
    • Regulation: Import/export permitted with standard customs documentation and compliance with safety standards.

  • Agricultural Products:

    Fruits, vegetables, and grains.
    • Regulation: Requires phytosanitary certificates and compliance with the Ministry of Agriculture regulations.

  • Food Products:

    Packaged foods, beverages, and spices.
    • Regulation: Requires licensing from the Thai FDA and compliance with food safety standards.

  • Cosmetics and Personal Care Items:

    Beauty products, skincare items, and toiletries.
    • Regulation: Must meet Thai FDA approval for ingredients and safety; requires import/export licensing.

  • Pharmaceuticals:

    Medications, health supplements, and medical formulas.
    • Regulation: Strictly regulated; requires Thai FDA approval and a separate import/export license.

  • Chemicals:

    Industrial chemicals, cleaning solvents, and agricultural chemicals.
    • Regulation: Requires approval from the Department of Industrial Works; environmental and safety compliance necessary.

  • Electronics and High-Tech Equipment:

    Computers, telecommunications equipment, and high-tech gadgets.
    • Regulation: Subject to compliance with Thai Industrial Standards Institute (TISI) and possibly the National Broadcasting and Telecommunications Commission (NBTC).

  • Automotive and Parts:

    Cars, motorcycles, and automotive parts.
    • Regulation: Requires compliance with environmental standards and safety regulations; subject to excise taxes.

  • Luxury Goods:

    Jewelry, watches, and designer clothing.
    • Regulation: Subject to high customs duties and must comply with regulations on import/export of luxury items.

What is the step-by-step process to obtain this license?

To obtain your import/export license, it is essential to understand the sequential steps involved in the official registration process. Below, you’ll find a detailed breakdown of each necessary stage, ensuring your business complies with Thai legal and regulatory standards.

  • Step 1: Company Name Reservation

    • Reserve a company name through the Department of Business Development’s online portal. This process is critical as it ensures your company name does not duplicate or closely resemble any existing names, in accordance with the Thai Commercial Code. 
    • The reservation is typically processed within 1-2 business days and involves a small fee. It’s important to choose a unique and meaningful name that aligns with your business’s branding and legal requirements.

  • Step 2: Company Incorporation

    • Once your company name is secured, the next step is to formally incorporate your company by submitting required documents to the Department of Business Development. 
      • These documents include the Articles of Association, which outline the regulations for the company’s operations, and the Memorandum of Association, which details the objectives of your company. You’ll also need to provide information about the company’s shareholders and directors. 
    • The incorporation process can vary in duration, usually taking a few weeks, depending on how promptly and accurately the documents are submitted. The cost of incorporation will depend on the declared capital of the company.

  • Step 3: Tax and Customs Registration

    • After incorporation, you must register for VAT if your projected annual turnover exceeds 1.8 million THB. This step is crucial for tax compliance.
    • Additionally, applying for a Customs Import/Export Card is mandatory for businesses engaged in international trade. This card provides customs officials with details about your business operations and the types of goods you intend to trade, ensuring that all transactions comply with Thai laws.

  • Step 4: E-Customs System Setup

    • Setting up the e-Customs software is essential for facilitating efficient documentation processing and ensuring compliance with Thai Customs. This system allows for the electronic submission of customs declarations and other required documents, streamlining the import/export process.
      • It is important to ensure that your IT system is compatible with the e-Customs software and that your staff is trained to use it effectively.

  • Step 5: Product Classification and Documentation

    • Correctly classifying your products is crucial to determining the necessary documentation and inspection procedures. 
      • Companies will need to submit the Import or Export Declaration alongside the following supporting documents:
      • K1 application (pages 1 and 2)
      • Copy of the company affidavit (updated within six months)
      • Two copies of value added tax certificate (Phor Phor 20)
      • Copy of first page of bank account and bank statement
      • Copy of seal registration (BAJ 3)
      • Copy of passport
      • Power of attorney (page 3 of the K1 application)
    • Products classified as ‘red line’ require additional documentation and are subject to stringent checks due to their high-risk nature, whereas ‘green line’ products undergo regular screening. Accurate product classification helps avoid delays and ensures compliance with customs regulations.

  • Step 6: Payment and Inspection

    • The final steps involve making the necessary payments for customs duties and taxes through authorized systems and undergoing customs inspection. 
    • The method of payment and the intensity of inspections depend on the product classification. Once all duties are settled and products are inspected, customs will release your goods for import/export.

Understanding the complex framework of import/export regulations in Thailand is essential for business success. Benoit and Partners offers expert guidance in navigating these regulations, ensuring compliance with local laws and optimizing your business operations. Contact us to ensure your venture in Thailand progresses smoothly and efficiently.