Thailand to Exempt Process Oils Excise Tax

Thailand will exempt most process oil-derived products from excise taxes later this year, according to government officials, but lube blenders will continue being taxed at the 5 baht (U.S. 14 cents) per liter rate introduced in January.

Since implementing excise taxes on most all products derived from petroleum oil - including base oils - earlier this year, while also raising other taxes, Thailand has brought in far more revenue than it expected. Ministry of Finance data in June showed that the countrys new excise tax accrued around 327 million baht in the first seven months of the year.

Excise Department Director General Somchai Poonsawat said in a January statement that the 5 baht per liter tax for jet oil, fuel, benzene and lubricants was established to promote fair trade and conserve the use of nonrenewable petroleum products.

However, recently a government official announced that a decision had been made to reel back the excise tax on some finished products derived from base oils such as synthetic rubbers, tires, candles, polishing and compounding finishes.

A spokesman of the office of the Prime Minister, Lieutenant General Sansern Kaewkamnerd, told local news reporters recently that a distinction in tax rates on products derived from base oil was necessary because base oils are used for vastly different purposes. Industrial materials - such as those derived from base oils categorized as process oils - should be exempt from the taxes levied on value-added products such as lubricants, he said. Furthermore, products manufactured with recycled oils should be exempt as well.

A spokesperson for the Excise Departments Legal Office, requesting anonymity, told a Lube Report Asia correspondent that the exemption change is currently being drafted for a September 17 adoption. However, he recommended that oil suppliers unsure about where their products fall under the new scheme send oil samples to the departments lab for testing. For example, he said, its unclear how transformer oils will be categorized.

Bangkok, Thailand-based correspondent Kate Torsuwan contributed to this report.