Thailand's Drink Tax and Trends - Functional Drinks in Thailand - Mr. Nutthakorn Utensute
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Thailand’s Drink Tax and Trends -
Functional Drinks in Thailand
Mr. Nutthakorn Utensute
Principal Advisor on Excise Control System Development
Excise Department
The Purpose of Excise Tax
Health Maximizing Environment
Limit consumption of promoting
goods or services which Revenue environmental
have health impacts (Sin friendly products
and Health Tax) (Green Tax)
Competitiveness
Government
Policies
Energy promoting specific goods
with energy usage
efficiency (Green Tax)
2
Principle of Non-Alcoholic Beverages
Excise Taxation in Thailand
Present
Soda
Health Tax sugar
health concern
content
Carbonated
Soft Drinks
Past
Soda
Energy/
Sport Drinks
Carbonated
Soft Drinks
of ex-factory/ Luxury Tax of suggested
CIF price unnecessary for retail price
Energy/
Sport Drinks living
Juice
Juice
3
Taxation on Non-Alcoholic Beverages
Tax Policy
Non-tax Policy Specific Tax: Health Concern
Specific Tax
VS.
Ad Valorem: Luxury purpose Ad Valorem
Raise awareness about sugar consumption Tax
Change consumption habits (5-6 years) Use tax differentiate to change Tax
consumption habits Differentiate
Create cooperation between public and private sectors
to suggest suitable sugar intake (Thai Pledge)
Consider effects on tax policy that
Substitution
Provide a variety of healthy beverages can lead to consumption of
Effect
substitution products
4
Non-Alcoholic Beverages Tax Structure
Item Tax Structure According to Excise Act B.E. 2560
Unit Tax Based on Sugar Contained
Ad valorem
(Suggested
1 Oct 2019 to 1 Oct.2021 to 1 Oct 2023
Retail Price) Sugar Content
30 Sept 2021 30 Sept 2023 onwards
% gram/100 ml Baht/Litre Baht/Litre Baht/Litre
Soda 14 - - - -
- Carbonated Soft Drinks
Not Over 6 0 0 0
- Sport Drinks 14
- Energy Drinks
More than 6
0.10 0.30 1
Functional drink – water based 10 Less than 8
Juice: General 10 More than 8
0.30 1 3
Less than 10
Juice: Exempted 0
More than 10
Functional drink – juice based 3 1 3 5
Less than 14
Concentrated (used with More than 14
14 3 5 5
beverage machine) Less than 18
Powdered & Concentrated - Over 18 5 5 5
5
Specific Tax on Non-Alcoholic Beverages
(Sugar Tax)
Unit Tax Based on Sugar Contained (Baht/Litre)
0-6 0 0 0
6-8 0.1 0.3 1
Sugar Content (gram/100 ml.)
8 - 10 0.3 1 3
10 - 14 1 3 5
The higher the sugar
content, the higher
5 the tax.
14 - 18 3
> 18 5
1 Oct 2019 to 1 Oct.2021 to 1 Oct 2023
30 Sept 2021 30 Sept 2023 onwards
6
Excise Tax Burden on SRP
Total Excise Tax Burden (THB)
1 Oct 2019 - 1 Oct 2021 - 1 Oct 2023
30 Sep 2021 30 Sep 2023 onwards
Sugar Content
11 gram/100 ml. SRP (exclude VAT) 11.00 13.00 16.00
Unit Tax Based on
Sugar Contained 0.33 0.98 1.63
(baht/litre)
Ad varolem (14%) 1.54 1.82 2.24
Excise tax 1.87 2.80 3.87
Interior tax
(10% of Excise tax) 0.19 0.28 0.39
Total Excise Tax 3.08 4.26
2.06
Burden
7
Non-Alcoholic Beverages Revenue Collection
Fiscal Year 2014 - 2020
Million Baht
585,407
580,448
562,361 548,365
517,686
439,092
379,593
4.61%
4.14%
25,306.00
3.79% 24,232.34
Sugar Tax
21,994.28
2,827.82
3.00% Sugar Tax
4.34% 4.01% 3.46% Sugar Tax
17,598.54 17,899.03 16,858.35 2,954.77 2,432.13
16,621.88
Second-phase
Fiscal Year 2014 2015 2016 2017 2018 2019 2020 of sugar tax
Excise Tax Revenue Non-Alcoholic Beverages Revenue
8
Sugar Tax Revenue Collection 2018 - 2020
1,897.98
2018 2019 2020 2020 (second-phase of sugar
tax) There is a second round
1,573.45 of reformulation particularly
on high sugar contained
Non tax measurement beverages.
has been implemented for 1,507.71
such a long time but
ineffective.
2018
824.65
511.09
480.59
341.73
2018-2019 (first-phase of sugar tax) 2020
174.66 413.45 Reformulation was outstanding.
281.37
131.96
2019
76.08
More than 6 More than 8 More than 10 More than 14
Less than 8 Less than 10 Less than 14 Less than 18
Sugar Content (gram/100 ml.) 9
Non-Alcoholic Beverages Revenue Collection
2019 - 2020
Million THB
11,963.30
11,669.62
6,328.53
6,318.57
3,177.15
3,033.83
1,625.31 1,252.08
1,593.06 273.85
446.89 299.80 753.53
2.70 687.82 114.61
Carbonated Soft Soda Energy Drinks Juice Tea & Coffee Functional Drinks Powdered & Others
Drinks Concentrated
2019 2020
10Functional Drinks Tax and Trends in Thailand
Water Based Fruit Based
107 Million Baht 192.8 Million Baht
(25 Million Litres) 2020 (145 Million Litres)
2.7 Million Baht 2019 0 Baht
Apparently, adding categories list of particulars Functional drink is
able to promote growth of functional drinks even in economic recession.
There are many new products launched since 2020 particularly
“vitamin waters”.
11Non-Alcoholic Beverages and Covid-19 Impact
temporary and
permanently shut
down in many
business
Sugar tax in third-phase that
tax increase by 3 times will be Pandemic situation
disappear of 40
effect beverage industry. will be unfold around
million tourist
demand Excise department is the beginning of
considering to reduce the 2022 due to vaccine
effect of sugar tax increase by fully effective and
postpone the third-phase also the return of
local purchasing implementation. tourist demand.
power has been
decreased
12Key Features of Non-Tax Measures
to Raise Public Awareness
- Promoting activities or campaigns to raise awareness and advocate for
healthy dietary behaviors
- Promoting Healthier Choice logo and food labelling education programs
- Increasing distribution channels for healthier products
- Promoting a nutrition education program designed to reduce sugar
intake in school
- Cooperation between public and private sectors to increase the
collaboration for tax and non-tax policy
13Future Direction of Non-Alcoholic Beverages Tax
Promote health Encourage the beverage Make sugar-free drinks Functional drink trends
awareness as a key of industry to reformulate cheaper and increase will be growth and
excise tax development their products according more healthier products become a ‘Health
and tax innovation to the low sugar content to the consumers Trend”.
Health
Specific Rate
Ad valorem
Rate
Luxury
14Key Success Factors of Non-Alcoholic Beverages Tax
• Using “sugar contents” as a unit tax base for locally produced or imported sugar
Fairness sweetened beverages to create fairness: the higher the sugar content, the higher
the tax would be
• “Guideline Daily Amount (GDA) Labeling” intending consumers to make
Transparency healthier choice easier
• (Suggested Retail Price x Ad varolem Tax Rate) + Sugar Tax Based on Sugar
Simplicity Content
• Encouraging manufacturers to reformulate to lower-sugar products and raising
Efficiency consumers awareness of the benefits of low sugar consumption
15Regulations on Cannabis and Hemp
Used in Food Products
Food Division
Thailand Food and Drug AdministrationNotifications of Ministry of Public Health (MOPH) that
promulgated by the provisions of the Narcotic Act B.E. 2522
MOPH-Notification B.E. 2563 regarding Narcotic substance in classes 5
(entered into force on 15 Dec 2020 onward)
Parts and extracts of marijuana and hemp shall not be considered as Class 5 Narcotics, provided that
they are fully authorized to be grown or produced in Thailand by the Ministry of Public Health. The
delisted parts and extracts of marijuana and hemp are:
• Bark, stem, fibre, branch and root
• Leaf (without inflorescences & flowers)
• Hemp seed, hemp seed oil or hemp seed extract
• Cannabidiol (CBD) with tetrahydrocannabinol (THC) amount not exceeding 0.2% of the total weight
• Residue or sludge deriving from cannabis extraction process with tetrahydrocannabinol (THC)
amount not exceeding 0.2% of the total weight.Notifications of Ministry of Public Health (MOPH) that promulgated by the provisions of the Food Act B.E. 2522 MOPH-Notification (No.424) B.E. 2564 regarding Foods that are prohibited to produce, import and sale (entered into force on 26 Feb 2021 onward) MOPH-Notification (No.425) B.E. 2564 regarding hemp seeds, edible oil derived from hemp seeds, protein derived from hemp seeds and food products containing hemp seeds, edible oil or protein derived from hemp seeds (entered into force on 6 March 2021 onward)
Notification (No.424) B.E. 2564 regarding Foods that are
prohibited to produce, import and sale
Objective of the regulation:
To ban plants or animals from using in commercial foods including food ingredients.
Scope of the regulation:
Applies to all foods from domestic production and those imported into
Thailand.
A Key provision:
Ban 80 species of either plants or animals to use in commercial foods.
Details showed in its Annex, List of prohibited plants or animals or parts of plant or animal.Notification (No.424) B.E. 2564 regarding Foods that are
prohibited to produce, import and sale
No. 18, Annex I
Marijuana and Hemp are prohibited except part or substance that they are fully
authorized to be grown or produced in Thailand and complied with related MOPH-
notification. The delisted parts and substance of marijuana and hemp are:
• Bark, stem, fibre, branch and root
• Leaf (without inflorescences & flowers)
• Hemp seed, hemp seed oil or hemp seed extract
• Cannabidiol (CBD) with tetrahydrocannabinol (THC) amount not exceeding 0.2% of
the total weight
• Residue or sludge deriving from cannabis extraction process with
tetrahydrocannabinol (THC) amount not exceeding 0.2% of the total weight.Conceptual Framework and Legislation of Notifications of Ministry of Public Health
Conceptual Framework
Pre-regulation Post-regulation Ex-post regulation
Data: Document review, Data = actual data evaluation
Experimental
Post-marketing survey
ML-THCA Pre-marketing product test
National surveillance
Food cat. A
Adjust MLs
THC conc. In food products
(Actual data)
ML-THCB
Prevalence of diseases Potency of diseases related
Food cat. B to THC exposure form foods
related to THC (cases/ year/10,000 pop)
+ Other risk management measures: e.g. labelling, risk communicationระเบี
Notification, No.425 B.E.ย2564
บวาระการประชุ
entitled “Hempมseed”
Ministry of Public Health Notification, No.425 B.E.2564 Issued by virtue of the
Food Act B.E.2522 entitled "Hemp seed, hemp seed oil, hemp seed protein, and
food product containing hemp seed, hemp seed oil, or hemp seed protein"
• Hemp seed, hemp seed oil, hemp seed protein, and food supplement containing
hemp seed, hemp seed oil, or hemp seed protein shall be a
“specifically controlled food”.
• Quality and standard of hemp seed and their product was determined.
• “Warning” shall be declared on label.Notification, No.425 B.E. 2564 entitled “Hemp seed”
Quality & Std. Quality & Std. Quality & Std.
Ex. THC, CBD Ex. THC, CBD Ex. THC, CBD
Hemp seed
protein
Food product
Hemp seed
contain hemp
Hemp seed
oilระเบี
Notification, No.425 B.E.ย2564
บวาระการประชุ
entitled “Hempมseed”
An example for food product allow to use “Hemp seed”
Hemp seeds oil
Bakery
Hemp cereals Hemp seed snacks Hemp seed oil
supplementNotification, No. ระเบีย….
… B.E. บวาระการประชุ ม
entitled “Food products containing
parts of cannabis and hemp” (on process)
Objective of the regulation
• Allow part of cannabis and hemp in food product
• Determine a standard of THC and CBD residues on food product contained part of
cannabis and hemp
Scope of the regulation
• Part of cannabis and hemp means: Leaf (without inflorescences & flowers), bark,
stem, fibre, branch and root
• All food category that use part of cannabis and hempNotification, No. ระเบีย….
… B.E. บวาระการประชุ ม
entitled “Food products containing
parts of cannabis and hemp” (on process)
Key control point
• Tetrahydrocannabinol (THC) shall not exceed 1.6 milligrams per package.
• Cannabidiol (CBD) shall not exceed 1.41 milligrams per package.
(THC and CBD shall be from natural contained in part of cannabis and hemp used in product)
• “WARNING” shall be displayed on a label
• Message of “Should not consume more than 2 packages per day” shall be displayed on a
labelResponsibility and Opportunity
FDA
Consumer Facilitate Trade
Protection
13ระเบียบวาระการประชุ
Responsibility ม
and Opportunity
No mandatory activity of this nature can achieve its objectives fully without the
cooperation and active participation of all stakeholders e.g. farmers, industry,
academic, government and consumers
Government Industry
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