Bt400m in steel-tariff refunds

Thailand will have to shell out about Bt400 million in tax refunds under the Japan-Thai Economic Partnership Agreement, which requires duties on imported Japanese steel to be cut to zero.

"The government's loss is limited, while indirect benefits are huge," Deputy Prime Minister Pradit Pataraprasit said yesterday.

"Indeed, this is not a loss, as they should not have been liable to the import tariffs after the agreement took effect," he said after meeting with the Thai Chamber of Commerce and auto-makers.

The special tax rate mainly applies to carmakers, he said.

The Cabinet will consider the special tax rates under the Jtepa next week, and the Customs Department should issue regulations late this month.

The refunds will cover steel imports as far back as November 2007, when the Jtepa took effect.

"The Bt400-million refunds are based on the auto industry's imports of 300,000 tonnes of Q11-type steel worth Bt8 billion per year." Pradit said.

The Bt400 million outlay would be a slight setback to the government's revenue, but lower material costs would improve the auto industry's competitiveness, he said.

The auto industry has won the support of government, thanks to its employing 330,000 workers, keeping thousands of parts suppliers in business and contributing nearly Bt740 billion in annual export revenue.

The Finance Ministry will work with the Commerce and Industry ministries and customs to complete the list of steel importers and their quotas, to prevent circumvention.

They will also trace how the imported steel was used to ensure there is no diversion to other industries, which is against the Jtepa agreement.