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Anti-smoking drive features tobacco tax hike

The government will increase the tobacco tax from July 4 in an effort to curb smoking, particularly among low-income smokers, according to the Public Health Ministry.


The tax hike is part of the wider enforcement of the Tobacco Products Act 2017 which will come into effect on the same day.

The ministry announced the tobacco tax hike as it rolled out an anti-smoking campaign themed “Tobacco, A Threat To Development” to mark World No Tobacco Day Wednesday.

The ministry also announced it will introduce tougher regulations on electronic cigarettes from the middle of the year.

The ministry said its campaign intends to hammer home the message that smoking incurs huge economic losses through the budget spent on treating people suffering from smoking-related illnesses.

The ministry said people need to become aware that smoking causes serious illnesses, including cancer. Smokers die 12 years sooner than their average lifespan and suffer a great deal of trauma from treatments for an average of two years before they die.

Meanwhile, the head of Chulalongkorn University’s Drug Dependence Research Centre, Jitlada Areesantichai, said there was no evidence to support the popular belief that smoking electronic cigarettes can help wean a person off smoking conventional cigarettes.

She said many e-cigarettes are imported and sold illegally, mostly through websites.

New models of e-cigarettes are also promoted, which motivates young people to try out the products. This leads to many more becoming addicted, she said.

The researcher noted the centre was currently studying the amounts of nicotine in the e-liquids which fill the various types of e-cigarettes.

Research conducted by the centre on consumers of e-cigarettes found the subjects started smoking the e-cigarettes from the age of 16 out of curiosity and because friends asked them to smoke.

She said youngsters took up smoking e-cigarettes because they thought it would make them look cool and believed it would help them give up smoking conventional cigarettes more easily.

However, the study found many remained hooked on conventional cigarettes.

New tobacco control law passed

The National Legislative Assembly on Friday passed the final reading of the Tobacco Control Bill, which raises the minimum age to legally buy cigarettes from 18 to 20 years and bans the sale of individual cigarettes.

The assembly unanimously endorsed the bill, which amends the Tobacco Control Act, with 202 votes debating it for nearly eight hours on Thursday and Friday.

The bill is aimed at better control of tobacco products and protecting people’s health in line with Thailand’s adoption of the World Health Organisation’s Framework Convention on Tobacco Control. The convention emphasises the protection of public health, especially the young.

The bill provides for a national committee on tobacco control. The public health minister will chair the panel, which will propose measures to control tobacco products, protect non-smokers’ health and rehabilitate smokers’ health.

The new law prohibits the sale or provision of tobacco products to people aged under 20, instead of under 18 as previously. Violators are liable to a prison term of up to three months and/or a fine of up to 30,000 baht.

It bans the production and sales-oriented importation of packs containing fewer than 20 cigarettes. Violators can be fined up to 300,000 baht.

In addition, the law prohibits the sale of individual cigarettes instead of packs of 20. The penalty is a fine up to 40,000 baht.

The NLA’s scrutiny committee deleted a clause in the bill that banned smokers from being appointed an expert member of the national tobacco control committee, to avoid discrimination.

Dr Jate Sirataranont, NLA member and head of the scrutiny committee, said the new law is expected to reduce the number of new smokers by an estimated 200,000 a year.

The new restrictions become effective once published in the Royal Gazette.

PM Thailand facing USD 2.8 billion in fines

Philip Morris Thailand was charged with underpaying import duty on cigarettes shipped from Indonesia, accusations that come one year after similar charges were filed over Philippine shipments, company documents show.

Philip Morris International’s (PMI) Thai subsidiary faces fines totalling THB 100.6 billion (USD 2.85 billion) in the two cases, PMI said in its annual report filed with the US Securities and Exchange Commission. The latest charges filed on 26 January in Bangkok Criminal Court concern cigarette imports from Indonesia between 2002 and 2003, the document shows. The Public Prosecutor is seeking fines of THB 19.8 billion. A procedural hearing is scheduled for April.

A year ago, PM Thailand was charged over cigarette shipments from the Philippines between 2003 and 2007. Fines in that case amount to THB 80.8 billion. Trials are scheduled to begin late this year, the PMI filing shows.

Philip Morris Facing More Thai Tax Evasion Charges

By Bryan Koenig

Law360, Washington (February 14, 2017, 6:38 PM EST) — Philip Morris International Inc. announced a widening Tuesday of the government of Thailand’s long-running criminal investigation seeking billions of dollars in potential penalties based on allegations the company deliberately shorted cigarette import prices to avoid full taxation.

The charges announced in Philip Morris’ annual report with the U.S. Securities and Exchange Commission were filed Jan. 26 and follow charges levied against the company a year earlier. While the January 2016 charges are seeking more than $2 billion in fines purportedly stemming from imports from the Philippines, the new charges cover cigarettes imported from Indonesia, Philip Morris said in the report.

“The government is seeking a fine of approximately THB 19.8 billion (approximately $562 million). The first hearing, which will focus on preliminary procedural matters, is scheduled for April 2017,” Philip Morris said in the filing. “PM Thailand disagrees with the allegations and believes that its declared import prices are in compliance with the Customs Valuation Agreement of the [World Trade Organization] and Thai law.”

According to the cigarette giant, the Thailand Department of Special Investigation, or DSI, probed Indonesian imports and the subsequent excise taxes and customs duties paid from 2000 through 2003. The late-January charges the public prosecutor filed in Bangkok Criminal Court also targeted a Thai ex-employee, Philip Morris said.

The company stands accused of working with the employee “with the intention to defraud the Thai government” on “under declared import prices of cigarettes” from 780 import entries between January 2002 and July 2003, all to avoid full taxation and duties, according to the filing.

The charges filed last year against Philip Morris (Thailand) Ltd. and seven current and former workers in the same court followed an investigation into the period from 2003 to 2007, according to the filing. Those charges cover allegedly “under declared import prices” from 272 entries brought in from the Philippines from July 2003 to June 2006, Philip Morris said.

“The government is seeking a fine of approximately THB 80.8 billion (approximately US$2.29 billion). The case is in the pre-trial evidentiary phase. Trials are scheduled to begin during the last quarter of 2017,” the company said.

“PM Thailand believes that its declared import prices are in compliance with the Customs Valuation Agreement of the World Trade Organization and Thai law and that the allegations of the public prosecutor are inconsistent with several decisions already taken by Thai Customs and other Thai governmental agencies.”

The Thailand charges are not the end of Philip Morris’ international tax woes.

Tuesday’s filing also discussed a South Korean Board of Audit and Inspection probe into whether inventory changes by cigarette companies like Philip Morris Korea Inc. complied with the country’s tax laws in the run up to a Jan. 1, 2015, cigarette tax increase. According to the filing, the audit wrapped up in November with the assessment of underpaid taxes and penalties. In order to avoid “nonpayment financial costs,” Philip Morris’ Korean affiliate paid the full amount of taxes assessed to the tune of about $185 million, according to the company.

Philip Morris also reported an early 2017 demand for around US$46 million total from other government authorities. The company vowed to appeal the assessments, while noting that the matter has been referred to the public prosecutor, who will investigate the potential for criminal charges against the company and others.

“If the public prosecutor decides to prosecute, it may seek up to three times the underpaid tax for company criminal penalties and up to five times the underpaid tax for individual criminal penalties,” the company said. “PM Korea believes that it has paid cigarette-related taxes in compliance with the South Korean tax laws.”

South Korea’s Ministry of Strategy and Finance has also filed criminal charges against the country’s Philip Morris unit and its managing director, according to the filing, which characterized the charges as allegations that it went over monthly product withdrawal restrictions imposed by the ministry. The public prosecutor will conduct an investigation into that complaint and make a decision about pursuing a case, according to Philip Morris, which noted disagreement with the allegations.

B130m in contraband medicine and cigarettes seized

The Customs Department has seized more than 130 million baht worth of medicine and foreign cigarettes as part of a concerted effort to crack down on smuggled, counterfeit and unpaid tax products.

Some 120 million baht in medicine was seized, along with another 12 million baht in smuggled cigarettes, director-general Kulit Sombatsiri said in a statement.

The medicine had been produced in India and flown to Singapore before being delivered to Thailand by ship.

Over 2 million pills of sildenafil soft gel capsules and other medicines were seized by the Customs Department as they were shipped to Thailand without licences, he said.

He added that the importers had made false declarations in terms of type, volume and weight, which breached sections 99 and 27 of the Customs Act.

Only companies that have received licences from the Food and Drug Administration can import sildenafil, taken to treat erectile dysfunction, to Thailand.

Mr Kulit said 6.32 million cigarettes were also smuggled into Thailand without evidence of customs and excise tax duty payment, violating Section 27 and 27 (bi) of the Customs Act.

The illegal cigarette packages were sealed with tax stamps from China, where they had been manufactured.

If the cigarettes had not been seized, they might have been sold on the market immediately, said Mr Kulit.

The statement said the Customs Department will continue to tighten inspections to catch imported goods on which tax payments have been avoided, in accordance with the policies of the department’s director-general.

In the last fiscal year, ending Sept 30, 2016, the Customs Department managed 113 raids on those who had smuggled cigarettes worth 11.6 million baht, according to Customs Department data.

Customs officials arrested 43 people each in October and November and seized cigarettes worth 5.36 million baht and 4.54 million, respectively.

The number of nabbed cigarette smugglers in December declined to 27 and the value of contraband also fell to 1.69 million baht.

Earlier this month, the Customs Department ordered Bestlin Group, which was contracted by the Bangkok Mass Transit Authority to procure natural gas vehicles, to pay 370 million baht to retrieve the first lot of 100 vehicles, after the company was found to have improperly imported the buses and declared the import tax on them.

The buses were imported from China to Malaysia by sea before being shipped to Thailand.

The company had manipulated the import process to make the buses appear as though they had been made in and imported from Malaysia.

Bestlin was attempting to reap a tax exemption from the Asean’s free-trade agreement.

NLA raises legal age for tobacco to 20

The National Legislative Assembly (NLA) agreed in principle on Friday to raise the legal age for purchasing cigarettes from 18 to 20 under an amended law regulating tobacco.

A total of 159 NLA members voted for the measure on Friday, with five abstentions, increasing the minimum legal age to buy cigarettes under the bill to amend the Tobacco Control Act.

The amendment was proposed by Public Health Minister Piyasakol Sakolsatayadorn in a bid to cut the number of teenage smokers.

A 21­member committee will be set up and given 15 days to scrutinise the bill.

Dr Piyasakol said the current Tobacco Control Act and the Non­Smoker’s Health Protection Act were obsolete and could not keep up with the behaviour of smokers.

Enforcement of both laws were also ineffective, he said. However, the Non­Smoker’s Health Act has not been amended.

Under the World Health Organisation’s Framework Convention on Tobacco Control, any law associated with tobacco must be amended to protect the health of citizens, particularly youth, he added.

NLA member Wallop Tangkana­nurak said the amendment would help steer children and teenagers away from tobacco and smoking.

Many international tobacco firms have held promotional activities targeting young people aged under 20, he said, citing statistics showing smokers are getting younger every year.

Despite the majority of the NLA members agreeing with the bill, others expressed some reservations about it, saying it would would reduce demand for tobacco and put many growers out of work.

Gen Danai Meechuwet, chairman of the NLA committee on agriculture, said measures to provide assistance for tobacco farmers should be devised as well.

He also proposed establishing a subsidy fund for tobacco planters or encourage them to grow other crops.

Meanwhile, NLA member Montien Boonton also proposed devising measures to limit tobacco farming areas as well as new approaches to publicise the dangers of smoking among the illiterate.

Dr Piyasakol said he believed that after the draft amendment bill has passed, the health condition of Thais in general will greatly improve.


Singapore leads the way in a 10-country race in the ASEAN to protect public health from the harms of tobacco use according to the Framework Convention on Tobacco Control (FCTC) Scorecard launched by the Southeast Asia Tobacco Control Alliance (SEATCA).

In a region where nearly half of all adult men smoke and where 10% (125 million) of the world’s smokers live, it is indeed a race to reverse the smoking epidemic and its devastating impacts that claims about 500,000 deaths every year.

“The scorecard acknowledges achievements and progressive efforts of ASEAN governments while also identifying implementation gaps that need further action. It also encourages comparisons between countries to further motivate the strengthening of FCTC implementation. Overall, there is significant room for further progress,” said Dr. Ulysses Dorotheo, SEATCA FCTC Program Director.

Over-all, Singapore scored the highest (80.5%), followed by Brunei (71.2%) and Thailand (67.1%). Two key areas for improvement are in policies on tobacco taxation and protecting health policies from tobacco industry interference.

While raising tobacco taxes is recognized as among the most effective means of reducing consumption, this measure is the least well implemented among ASEAN countries. The region’s most expensive cigarettes are found in Brunei and Singapore, but cigarettes are still generally very affordable in all countries.

Most countries are experiencing tobacco industry interference and do not have a FCTC Article 5.3 policy or code of conduct to address this problem. Only Singapore has a FCTC Article 5.3 policy or code of conduct that is enforced by the whole government, while the Philippines has a FCTC Article 5.3 policy or code of conduct that applies to the whole government but needs improved enforcement.

Enforcement of smoke-free policies needs to be strengthened further to achieve the full health benefits of such policies. All countries restrict or ban smoking in many settings, but only Brunei enforces a smoking ban in all indoor workplaces, indoor public places, and public transport, as well as some outdoor public places.

While standardized packaging of tobacco or ‘plain packaging’ is widely regarded as the best way to package tobacco, no ASEAN country has yet implemented this measure.

All countries, however, require pictorial health warnings on packages, although some require them only for cigarettes and not for other (e.g. smokeless) tobacco products.

Thailand leads with the largest pictorial health warnings (85% front and back).

All ASEAN countries except Indonesia, a non-party to the FCTC, enforce a complete ban on tobacco advertising in print media, TV, radio, and cinema. Regrettably, only half of the ASEAN countries (Brunei, Malaysia, Singapore, Thailand, and Vietnam) enforce a ban on tobacco advertising at points of sale (POS).

The scorecard is available at

Tobacco law loophole under review

The Excise Department may ask the government to allow the legal import of electronic cigarettes and baraku, which would be taxed like cigarettes, says director-general Somchai Poolsavasdi.

He said the department has noticed a loophole in the current tobacco law, which does not define these products as new types of tobacco-related goods intended to replace conventional cigarettes.

“We are still uncertain whether we will allow them to be imported legally or not, but if we decide to allow it we will have to tax them for sure,” said Mr Somchai.

“We have decided to take the first step to treat them properly by adjusting the legal definition of tobacco to cover all of these items. It not only concerns electronic cigarettes and baraku, but everything that has been created to be consumed in place of cigarettes,” he added.

Under the Tobacco Act 1966, tobacco products are defined as those made from tobacco leaf only, hence, it cannot govern cigarettes in electronic form or water pipes, also known as baraku, which are also now available in electronic form.

“Once we define these goods as taxable items, it will be easier for us to tax them later if we allow them to be imported legally,” said Mr Somchai.

While new ways of smoking and vaping have been available on markets worldwide for years, it is illegal to import such items into Thailand, resulting in them being smuggled in.

“It is quite complicated as tobacco is a sensitive issue here. We have to study thoroughly the pros and cons of allowing them to be imported legally,” he said.

It is still debatable whether e-cigarettes or baraku are healthier alternatives to cigarettes and cigars.

The amended law on excise tax has been passed by the Council of State after earlier being approved by the cabinet. It is now under consideration of the National Legislative Assembly. If the NLA approves the revised law, it will come into effect 180 days after it is announced in the Royal Gazette.

The excise tax restructuring is part of the Finance Ministry’s comprehensive tax reforms, while the Tobacco Act is a part of the tax reform plan. The legal amendments will switch the excise tax basis to state-recommended retail prices from ex-factory prices. The change is expected to come into force by mid-2017.

Switching the method of calculation will standardise duty collection and create more fairness and transparency, said the director-general.

Under the current system of calculating excise tax, importers have used loopholes to understate the value of costs, insurance and freight (CIF) in order to reduce their tax burdens.

But the excise duty calculation based on state-recommended retail prices will make it harder for importers to evade making tax payments, said Mr Somchai.

Even though state-recommended retail prices are normally higher than ex-factory prices and CIF value, he said the change will not further burden importers, as the Excise Department will mitigate the effects by lowering the current rates.

Apart from the Tobacco Act, six other laws will be integrated into a single act to standardise and simplify the tax collection process to facilitate the new tax calculation structure.

They are the Liquor Act of 1950, the Playing Card Act of 1943, the Excise Tariff Act of 1984, the Excise Tax Act of 1984, the Allocation of Excise Tax Act of 1984 and the Allocation of Liquor Tax Act of 1984.

Higher Smoking Age, Tobacco Advertising Ban Approved

One of a number of government-mandated visual warnings which have been printed on packs of cigarettes sold in Thailand.

The interim cabinet on Tuesday approved a measure to raise the minimum smoking age to 20 from 18.

The increase was approved along with a raft of related measures to effectively ban all forms of advertising for the industry.

It also expanded the legal definition of tobacco products to apply to electronic devices and water pipes known locally as barakoo.

For more than a decade, cigarette use has declined in Thailand through concerted private- and public-sector efforts.

The measures will go to the interim legislature for adoption.

Thailand faces tough fight on plain packaging

Little known among the public, Thailand is set to introduce standardised packs for tobacco products – internationally known as “plain packaging”.

Published last year, the draft Tobacco Consumption Control Act sponsored by the Public Health Ministry is now being considered by the Council of State. The new regulation would require larger warning labels on all cigarette packages that would minimise the size of trademarks. All branding – colours, imagery, corporate logos and trademarks – will be removed, with manufacturers permitted to print only the brand name in small size.

The law is being billed as the authorities’ latest ploy to curb smoking. According to the Thailand Tobacco Monopoly, Thais puff through about 32 billion cigarettes a year, worth a total Bt40 billion. This is despite the latest excise tax hike, which cut down consumption by around 3 per cent.

If the bill is passed, Thailand would join developed countries like Australia, France and the United Kingdom in introducing plain packaging.

Australia led the way by passing its Tobacco Plain Packaging Act in 2012, since when all tobacco products have been sold in the same standard dark-brown packaging with matte finish. Authorities said the new rules would help reduce smoking rates and combat the ill-effects of tobacco.
France will be next, when it rolls out plain packs from January 1 next year, followed by the UK from May.

Meanwhile, some countries – developed and developing – are considering following suit, which should further dampen the mood of big tobacco companies like Philip Morris International, British American Tobacco, Imperial Tobacco and Japan Tobacco International.

Mulling the move are Ireland, New Zealand and Malaysia, whose Health Ministry director for disease control Chong Chee Keong has announced the plan but no date for implementation.

But it is developing countries that have to tread carefully here, since the law risks attracting lawsuits from tobacco companies while also boosting sales of contraband tobacco products.

Plain-packaging pioneer Australia was lauded by World Health Organisation regional director Shin Young-soo, whose beat covers 37 countries ranging from Australia, Japan, South Korea, Singapore and China to Vietnam. It is estimated that two people die every minute from a tobacco-related disease in this region, which consumes one in three cigarettes sold across the world.

“The legislation sets a new global standard for the control of a product that accounts for nearly 6 million deaths each year,” Shin said, urging other countries to follow suit.

But the road so far has not been smooth. Australia has faced lawsuits and accusations from World Trade Organisation member countries Dominica, Cuba, Honduras and Indonesia of breaching internationally accepted trademarks and intellectual property. A case against Australia was filed with the WTO in 2013, but a ruling is not expected within this year, due to “complexities”.

Meanwhile, Philip Morris Asia launched a challenge in 2011, arguing that the ban on trademarks breached foreign investment provisions of Australia’s 1993 Investment Promotion and Protection Agreement with Hong Kong. But the arbitral tribunal in December 2015 declined jurisdiction to hear the case.

The Thai authorities must be closely following the case, since the Kingdom will definitely face the same ordeal, which could take years to resolve.

Indeed, Thailand is already facing headwinds.

During the WTO’s Trade Policy Review in November 2015, Thailand was asked several questions concerning its plan and how it would ensure that intellectual property (IP), especially trademarks, is protected.

Honduras was pretty active in the session, firing a barrage of questions at the Thai representative.

One inquiry was whether Thailand had scientific evidence that prohibiting the display of product names, marks and the name of the manufacturer or importer would have significant impact on tobacco consumption. Thailand admitted it did not.

Questioned on how it would uphold the value of IP with plain packaging, Thailand said the move was purely to reduce public health risks, and there was no restriction on the use of trademarks.

Asked how current trademark displays would be affected by the bill, Thailand said the new law had not yet been implemented.

Honduras also enquired whether Thailand’s Commerce and Finance ministries had taken any role in the decision. The Thai representative confirmed they were asked to comment when the draft law was tabled for Cabinet approval.

Thailand was also asked by China to explain how plain packaging protected trademarks and how the new act would ensure fair competition for the sale of tobacco products. Again, the response was that the legislation had not yet come into force and the objective was to reduce health risks – a legitimate public policy objective.

Meanwhile the United States and the European Union expressed concern that Thailand might extend the legislation to cover alcohol products. Thailand responded with neither a Yes or a No, merely saying that if the legislation is enforced, it would apply to both domestic and foreign products on a non-discriminatory basis.

The fight will be a long one, with all stakeholders desperate to maintain their status in a huge global industry worth more than $600 billion.