Customs regulations should be amended to restrict imports of cars and auto parts to only authorised importers and distributors, says the Federation of Thai Industries.
FTI members and luxury car importers discuss the tax issue at Queen Sirikit National Convention Center in Bangkok yesterday. SOMCHAI POOMLARD
The FTI, together with representatives of luxury car brands Mercedes-Benz, BMW, Porsche and Bentley, urged the government to take steps to curtail the loopholes used by independent importers in the "grey market".
Suparat Sirisuwannangkura, chairman of the FTI's automotive industry club, said the grey market cost the country an estimated 44.4 billion baht in 2011.
Of this, 8.77 billion represented lost tax revenues for the government, while another 32.5 billion represented consumer losses in the form of corruption, tax evasion and other damages. The FTI study was limited to damages suffered by the four key manufacturers from the import of luxury cars.
Mr Suparat said the government should follow Vietnam and impose controls limiting imports of cars and auto parts to only authorised and licensed channels.
This would ensure consumers were protected on maintenance, guarantees and service based on a single standard.
Grey market importers take advantage of loopholes in the law by using imported parts and reassembling the cars locally to bypass high import taxes.
Auto parts are taxed at rates from zero to 30%, compared with 80% or higher for imported cars. After import taxes, cars are also subject to excise taxes based on engine size _ which means overall, taxes can triple the factory cost of a car for a buyer.
The FTI said grey market importers bypass customs taxes by either separating cars into multiple parts, underdeclaring the value of the car or importing used cars.
In 2011, 5,942 units of imported luxury cars and auto parts were recorded, of which 81.8% represented parts, 9.74% completed cars and the rest second-hand cars.
Mr Suparat warned many overseas carmakers delayed plans to boost their domestic manufacturing operations due to the growing grey market, affecting one of the largest industries in the Thai economy.
Komkrit Nongsawat, marketing and communications general manager of Mercedes-Benz (Thailand), said the parent company started a policy not to service grey-market cars last year to control after-sales quality.
About the author
- Writer: Piyachart Maikaew
Position: Business Reporter