How to Apply for an Alcohol License in Thailand

In Thailand, opening a company that sells, serves, imports, or produces alcoholic drinks necessitates a thorough comprehension of the complex licensing procedure. The Liquor Act of 1950 and the Alcoholic Beverage Control Act of 2008 provide the Thai government with a number of license types that allow for stringent regulation of the alcohol business. Neglecting to acquire the necessary license may result in serious legal consequences. We'll lead you through each stage of the application process for an alcohol license in Thailand in this legal guide, along with links to further resources if you need more details.

Understanding the Regulatory Framework

Two classifications of alcoholic drinks exist: undistilled spirits and distilled spirits, as defined by the Liquor Act of 1950 and the Alcoholic Beverage Control Act of 2008. The alcohol content in undistilled spirits is less than 15 degrees, but the alcohol content of distilled spirits is more than 15 degrees. Companies involved in the manufacturing, importation, sale, or transportation of alcohol must apply for an alcohol license with the Ministry of Finance's Excise Department.

Importing Alcoholic Beverages to Thailand

Importing alcoholic beverages into Thailand mandates approval from an Excise Department officer. Submission of a "SOR2/74" form, accompanied by a 200 THB fee for trade purposes or 50 THB for non-trade activities, is essential. The required documents vary based on the intent to trade or not, including liquor selling licenses, invoices, label approvals, and identification documents.

When it comes to bringing in alcohol from abroad to Thailand, it's not just about securing a liquor license. There are additional duties that come into play before your imported goods see the light of day outside the Customs realm.

Breaking Down Alcohol Import Duties in Thailand

Customs Import Duties

The first layer involves Customs import duties. This is a preliminary duty that your imported alcohol needs to clear before it gets the official nod for release.

Excise Tax

Another player in the game is the Excise tax, overseen by the Excise Department. This tax contributes to the Interior Tax and is an integral part of the process.

Value Added Tax (VAT)

The third dimension is the Value Added Tax (VAT), managed by the Revenue Department. This tax adds to the financial considerations that accompany the importation of alcoholic beverages.

Rate Imposition

Import duties in Thailand are not a one-size-fits-all affair. They can be applied at a specific rate, an ad valorem rate, or on a compound basis. The ad valorem rate is calculated based on the domestic value (or 'true market value') of the imported goods, determined at the official exchange rate. The compound basis combines the specific and ad valorem rates, with the higher amount dictating the duties applied.

Percentages Relationship with Import Duties

Import duties for most goods, including alcohol, typically fall within the 5 to 60% range. However, these numbers are not set in stone. There are some variations, especially if you're under the umbrella of a Free Trade Agreement (FTA) or the ASEAN Free Trade Area (AFTA).

AFTA's Influence

While AFTA doesn't enforce a common external rate like the European Union, it does bring about lower rates for goods imported from member countries. This falls under the Common Effective Preferential Tariff scheme, where rates can dip as low as zero to 5%.

Fine Print for Alcoholic Beverages

When it comes to wine and beer with varying alcohol strengths, the details matter. For those not exceeding 15% or going beyond but not exceeding 23% (fermented liquors), the intricacies of import duties come into sharper focus.

Thailand Set to Reduce Alcohol Taxes

Toast to Change: The New Tax Landscape

In a significant move to boost tourism, Thailand's cabinet recently has given approval to sweeping changes in alcohol taxes. The aim is to uncork the potential of the wine and spirits industry while enticing more visitors to the Land of Smiles.

Wine & Spirits: Tax Cut Proposals

Wine Excise Tax Reduction

The excise duty on wine is going to drop from 10% to a more reasonable 5%, effective from January 2. It is anticipated that this move would be favorably received by foreign visitors to Thailand who are looking for a taste of international wines as well as local distributors.

Spirits: Zero Tax Ambition

The cabinet didn't stop at wine; spirits saw an even bolder move. The excise tax on spirits went from 10% straight to zero. This is not just a reduction; it's an elimination, giving a significant push to the spirits industry.

Import Tariff Cheers: A Year of Relief

For the next 12 months, Thailand has waived import tariffs on wines. Previously set at 54% and 60% of the declared value, this move aims to encourage more imports and make international selections more accessible to consumers.

Entertainment Venues Alcohol Taxes

Beyond the realm of bottles, Thailand's commitment to boosting tourism extends to entertainment venues. The excise tax on these establishments sees a 50% reduction, dropping from 10% to 5%. This incentive aligns with the broader strategy to create a more welcoming atmosphere for both locals and visitors alike.

Financial Ramifications and Future Hopes for Thailand Alcohol Industry

The tax adjustments are not without financial implications. In fiscal year 2023, alcohol-related taxes brought in a healthy Bt177.6bn ($5.7bn) for the Thai Excise Department. An estimated increase in tourism, which is predicted to climb from 128 million in the previous year to 134 million in 2024, is likely to more than balance the decline in income.

The onus is now on Thai distributors, retailers, and eateries to pass along these savings and guarantee that wine lovers really enjoy the advantages of these tax breaks.

Licenses for Selling Alcohol in Thailand

To sell imported alcohol in shops, restaurants, or bars, a business owner must secure an alcohol license Type 1. This involves completing the "SOR.2/64" form at the local Excise Department, paying an annual fee of 8,250 THB, and providing necessary documents such as invoices and sample labels. Compliance with Thai Industrial Standards is crucial for packaged alcohol products, ensuring details like import duties, product name, volume, manufacturer information, and alcohol degree are clearly specified.

Types of Alcoholic Beverages Licenses in Thailand

Understanding the diverse licenses available is crucial for any entrepreneur venturing into the Thai alcohol market. The spectrum of licenses includes:

• Type 1: Wholesale import and sale of more than 10 liters at a time of alcohol not manufactured in Thailand.
• Type 2: Wholesale of locally manufactured alcohol in quantities exceeding 10 liters.
• Type 3: Retail sale of less than 10 liters at a time of imported alcohol.
• Type 4: Retail sale of less than 10 liters at a time of locally manufactured alcohol.
• Type 5: Temporary retail sale of less than 10 liters of imported alcohol (not exceeding 10 days).
• Type 6: Temporary retail sale of less than 10 liters of locally manufactured alcohol (not exceeding 10 days).
• Type 7: For associations or clubhouses that sell alcohol.

Licensing for Alcohol Production in Thailand

For those venturing into alcohol production in Thailand, acquiring a license is mandatory. The license type depends on the alcohol type and production volume. Microbrewery licenses are available for beer production, while distillery licenses are required for producing distilled spirits. Operating without a license is illegal, emphasizing the importance of consultation with local authorities and licensing lawyers when applying for a liquor license in Thailand.

Changes in Regulation for Alcohol Production in Thailand

The Ministerial Regulation on Liquor Manufacturing 2022 was introduced on November 2, 2022, and it brought about a dramatic upheaval in the alcohol manufacturing industry in Thailand. The new legislation, which takes the place of the previous one from 2017, strengthens and relaxes the licensing procedures for anyone wishing to start a liquor production firm.

Home-Based Liquor Production in Thailand

In a notable shift, the Ministerial Regulation 2022 acknowledges and permits liquor production for non-commercial purposes, a category overlooked by its predecessor. This allows individuals to produce liquor at home for personal use, provided they obtain the necessary license from the Excise Department. It's worth noting that this non-commercial production cannot exceed 200 liters annually.

Brewing Beer in Thailand: New Guidelines and Eased Restrictions

Production of Beer

For those eyeing the commercial production of beer, a license from the Excise Department is essential. The applicant, a juristic person established under Thai law, must ensure Thai shareholders hold at least 51% of the total shares, unless specified otherwise in relevant treaties.

The Ministerial Regulation 2022 discards the previous requirement for a minimum registered capital of Baht 10 million and the minimum production volume of 100,000 liters per year. However, it introduces new stipulations for brew pubs, necessitating a factory license, compliance with machinery standards, and adherence to environmental and public health laws. Bottled beer breweries must now incorporate a printing system for the government's excise paid mark and fulfill additional criteria for establishment, including an approved environmental impact assessment report.

Distilled Liquor Production in Thailand

Production of Distilled Liquor

Producing distilled liquor for commercial purposes requires a license from the Excise Department, with the applicant, except for triple-distilled liquor, being a juristic person under Thai law with 51% Thai shareholder ownership. Distilleries dealing with whiskey, brandy, and gin are obligated to obtain a factory license with a minimum production capacity of 30,000 liters per day. Other types of distilled liquor, such as rice whiskey, follow suit but may vary for small and medium-size factories.

Production of Community Liquor

Community liquor production, encompassing both distilled and fermented types, mandates a license from the Excise Department. Eligible entities include cooperatives, community enterprises, farmers' organizations, and specific types of juristic persons under the Civil and Commercial Code. The Ministerial Regulation 2022 distinguishes between small, medium, and large-size distilleries, offering flexibility for community liquor producers to scale their operations, provided they meet certain conditions.

The Ministerial Regulation 2022 represents a considerable shift in Thailand's approach to alcohol production licensing. Whether you're a home-based enthusiast or an entrepreneur eyeing the commercial market, adherence to these new guidelines is paramount for a smooth journey in the world of alcohol production in Thailand.

Steps for Obtaining An Alcohol License in Thailand

Successfully completing the process of obtaining an alcohol license in Thailand involves a series of steps, here are the main points you should plan for:

Thailand Company Registration

Non-Thai nationals must register a company to sell alcohol legally in Thailand. While the type of structure is subject to discussion with your lawyer, a private limited company is often recommended. It's crucial to note that foreign ownership is limited to 49%, emphasizing the importance of legal structuring.

Liquor Licenses Application

Any person aspiring to sell alcohol in Thailand must possess a liquor license or alcohol license issued by the Ministry of Finance. The application process, conducted at the district office of the place of alcohol sale, incurs a fee of approximately 2000 baht, with annual renewals costing 1100 baht.

Visa and Work Permit Application

To legally work in Thailand, obtaining a work permit and a "non-immigrant visa B" is non-negotiable. These documents, delivered by Thai consulates and embassies, are prerequisites for engaging in any alcohol-related business in Thailand.

Registering for Excise Taxes

The final act in this regulatory play is registering for excise duty at the Excise Department of the Ministry of Finance. Following Article 25 of the Excise Duty Act, the registration process involves submitting a "Por Sor 01-01" form along with various documents, including identity cards, deeds identifying the business location, VAT registration certificates, and payment of government fees based on the establishment's square meters.

Conclusion: Getting Started in the Thai Alcohol Market

Systematically going through the process of obtaining an alcohol license in Thailand is a critical step for any business involved in the alcohol industry. Understanding the regulatory framework, complying with documentation requirements, and seeking professional guidance with applying for an alcohol license in Thailand are the keys to ensuring legal compliance. Prioritize the acquisition of the right alcohol license to set the foundation for a successful and legally sound business.