Success Stories
Case A – Free Zone Establishment 

Issue: 
A large European luxury automobile manufacturer wished to apply for establishment of a Customs Free Zone (“CFZ”) in Thailand as well as operating in the CFZ, in order to enjoy the duty exemption privilege on goods imported into the CFZ and duty reduction privilege on finished vehicles sold from the CFZ.

Our solution:
We advised them from Day 1 on every process of CFZ establishment including the eligibility criteria and conditions for setting up the CFZ, application procedures, and preparing and reviewing application documents, as well as recommending optimal business schemes and an inventory control system, all of which would enable the client to efficiently utilize the duty exemption for materials imported into the CFZ and the duty reduction privilege for finished goods sold domestically.

Result
The client was able to fully comply with CFZ regulations and achieve a significant cost saving resulting from a duty reduction from 80 percent to 0 percent as well as a reduction of excise tax base for calculating excise tax on vehicles manufactured and sold from the CFZ.

Case B – Advocate Amendment of Ministry of Defense Notification

Issue: 
A group of Japanese companies imported Phenolic Resin, an important compound widely used for manufacturing disc brakes and grinding wheels in the automotive industry. Such Phenolic Resin contains Hexamethylenetetramine, listed as a type of armament (explosive item) under the Armament Control Act B.E. 2530. The import of such Phenolic Resin was therefore prohibited unless the import license is obtained from the Ministry of Defense (“MOD”). Thai Customs charged the clients for importation of Phenoric Resin without import licenses, causing delays in importation and a large sum of duty shortfalls and penalties. The clients approached us to assist in mitigating the risk with Thai Customs.

Our solution:
We gathered facts and obtained academic opinion from a university professor that the amount of Hexamethylenetetramine extracted from Phenolic Resin is less than 20% which is insignificant to be used as an explosive item, and the extraction process required high-level expertise. We also collaborated with relevant stakeholders, such as the Japan Chamber of Commerce and Industrial Council of Thailand, in developing rationales for advocating the Armament Committee under the Ministry of Industry to issue a Ministry of Defense Notification to delist Phenolic Resin containing less than 20% Hexametrilenetetramine from the requirement to obtain an import license.

Result
We were able to successfully advocate for the issuance of MOD Notification which grants exemption to Phenolic Resin containing less than 20% Hexamethylenetetramine in year 2009. Thus, the clients’ potential customs liability relating to the importation of such products without import licenses are waived.

For more information, please contact:

Success Stories
Case A

Issue: 
A world leading tobacco manufacturer and importer wished to exploit tariff reduction privileges for its products through Free Trade Agreements (FTAs). To this end, they approached us to assist in conducting a comprehensive comparative study of FTA tariff preferences and rules of origin.

Our solution:
We conducted a detailed comparative analysis on preferential tariff rates of tobacco products under all FTAs entered into between Thailand and its trade partners. The analysis covered import tariff rates applied by Thailand and those applied by trade partners at the time of exporting to their countries, in-quota tariff rates, out-quota tariff rates, and rules of origin requirements.

Result
The findings of the comparative analysis enabled the client to effectively utilize the FTA privileges to save import duty and tax when importing and exporting to various countries.

Case B

Issue: 
A joint venture automotive manufacturer was contemplating certain business scenarios involving the utilization of a customs bonded warehouse and/or a Customs Free Zone as an ASEAN hub for part sourcing from local and overseas vendors, as well as for manufacturing and distributing the goods in Thailand and other ASEAN countries. The client’s aims were to minimize potential duty and tax, expedite the customs clearance process, and effectively manage inventory control.

Our solution:
We gathered facts on each contemplated business scenario and provided an analysis of their duty and VAT implications to determine which scenario allowed the client to enjoy maximum operational cost reduction. We also identified the relevant customs regulations and requirements with which the client must comply under these business scenarios, and finally introduced alternative business models for their consideration.

Result
The client has a better understanding and awareness of all of the risks involved in each business scenario, allowing the client to select the optimal business model which ensures smooth supply chain operation with reduced cost and saved time.

For more information, please contact:

Somruekarn Wongsaroj | Manager, Customs & Supply Chain
Tel. +66(0) 2 625 6375 | Fax. +66(0) 2 625 6311 
[email protected]

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