Oil Taxes: a series of taxes in Thailand's pump price

Motorists in Thailand tend to put a blame on the Government whenever they spot a price increase at their local gas station. And partly, that is a fair deductive reasoning, given that all the components in the build-up of Thailand pump price (post-refinery gate) is a direct result of the government's policies. But what is a function of each component? And does it make sense for motorists to absorb such costs?

Today, this article will cover the "Tax" components as there are a series of them to begin with! Most motorists are not aware that when they pay for their tank refueling, they have already been charged with 4 different taxes. (see Figure.1 below)

Figure.1 Example of Oil Price Structure in Thailand with taxes in blue columns

List of the tax components includes:

1. Excise Tax: a tax applied to fuel products under the Excise Tax Act of 2017 by the Ministry of Finance. It is collected at a fixed rate per liter when oil leaves the refinery or oil depot.

2. Municipal Tax: another form of Excise tax that is collected additionally for local government under Section 150 of the Excise Tax Act B.E. 2560. It is set a rate of 10 percent of the excise tax of each type of fuel according to the Ministry of Finance.

3. Wholesale VAT: first layer of 7 percent consumption tax which is charged when wholesalers (e.g. gas station operators) purchase the fuel from the refinery at oil depot.

4. Retail VAT: second & last layer of 7 percent consumption tax which is charged when motorists purchase the fuel at gas station.

   
   

Overall, it is noteworthy that the tax components are seldom changed due to the difficulty in amending the relevant Acts. Still, they all combine to a sizable portion of retail price that the motorists must pay.

In the next blog, the remaining components in the Thailand's oil price structure will be covered, which includes the important ones that the Government often use as their pricing lever in determining the pump price!