BANGKOK, THAILAND – Thailand’s Customs Department moved to tighten rules on free zones, penalties and digital clearance in an effort to curb origin fraud, undervaluation and market distortions.
Free-zone loopholes under review
Customs director-general Phantong Loykulnanta said his department, working with the private sector, had identified key weaknesses in duty exemptions for goods from free zones destined for the domestic market. Until now, exemptions were based on ASEAN rules of origin requiring a minimum of 40 percent regional content, a threshold he said often failed to reflect the real share of value created in Thailand. According to Phantong, current regulations allowed companies to count profits or even purchases from importers as local content, creating loopholes that could be deliberately exploited.
Redefining “value added” for local content
To close these gaps and prevent agricultural and other foreign products from avoiding taxes via free zones to the detriment of local farmers and SMEs, the agency prepared changes to a relevant ministerial notification. The plan was to redefine “value added” so that the 40 percent share must consist solely of domestic raw materials and Thai labour, ensuring genuine value creation in the country. Officials were also examining tougher conditions, including the exclusion of profit margins from the 40 percent calculation and a requirement for a substantial processing step, such as a change in tariff classification, rather than mere packaging or quality control.
Higher fines and shift to per-item penalties
On enforcement, the Customs Department aimed to overhaul its settlement and fines practice, with Phantong saying he would use his powers as director-general to revise penalty criteria and raise monetary sanctions. The focus was on false origin declarations and prohibited goods such as e‑cigarettes, with future fines to be imposed per item instead of being based on declared value. The department argued that a per-piece system would simplify valuation, reduce problems caused by underdeclaration and limit the discretion of individual officers.
“We believe that the old criteria do not deter offenders, because some goods have very high margins,”
said Phantong Loykulnanta, customs director-general.
He added that higher fines and faster settlements at the customs level could also ease the burden on investigators and courts.
Clearing seized goods backlog
Another goal was to reduce a growing backlog of seized goods, particularly e‑cigarettes. Phantong said the department was facing budget constraints for destroying confiscated items. Additional revenue from higher fines was to be used to finance the destruction of seized goods, lower storage costs and reduce theft risks followed by resale.
New import tax on low-value parcels
In parallel, customs officials took stock of a new levy on small consignments with a value below 1,500 baht, in force since 1 January. Import tax was now charged from the first baht of value. According to Phantong, the measure had so far generated more than 300–400 million baht, which he described as a significant sum contributing to fairer competition for domestic firms, and he forecast around 4.8 billion baht in revenue from this rule for the full year 2026.
Digital streamlining and AI-assisted classification
Phantong cited the large number of required licences from more than 23 to 40 authorities as the biggest problem for importers and exporters. The Customs Department was therefore pushing for a more efficient operation of the National Single Window (NSW) to consolidate procedures and shorten processes. The agency also planned to use artificial intelligence, including systems such as Gemini, to support customs officers in analysing HS codes, with the technology intended to standardise decisions, reduce disputes between administration and business, and speed up cargo clearance while combining stricter controls with faster digital processing.