Transit Trade and Transshipment in Thailand are regulated by the Custom Act issued in 2017, whose Chapter V is expressely dedicated to such cross-border activity.
Let’s first define what Trasit and Transhipment means by law:
Transit Trade in Thailand
“Transit” means a transportation of goods through the Kingdom from a customs house of entry to a customs house of exit under customs control where the beginning and the termination of such transportation are outside the Kingdom, with or without change of vehicle, storage, breaking bulk for a transportation purpose or change in a mode of transport. There shall be no use of goods in transit for any purpose or action with a commercial benefit in connection with such goods in the Kingdom (source: Thai Custom Act, 2017).
Summarizing: when both origin and destination of a cargo are outside Thailand, but such cargo transit in a Custom House in Kingdom territory, we can talk about Transit Trade. There must not be any commercial action or benefit (mark-up) involved.
Transshipment in Thailand
“Transshipment” means a transfer of goods from an importing means of transport to an exporting means of transport under customs control within an area of one customs house where the beginning and the termination of such transportation are outside the Kingdom (source: Thai Custom Act, 2017)
Summarizing: when both origin and destination are outside Thailand and cargo undertakes a change of transport method (or vector), we are talking of Transshipment.
Transshipment may consist in a simple change of vessel/truck, or in dowloading the goods, temporary storage in a Custom Bonded warehouse and subsequent loading into a new container. In this case a new shipment shall be generated with new documentation indicating Thailand as Origin of the shipment. Past history of the goods can’t be traced.
Are goods in Transit or in Transshipment subject to tax?
No, the Thai Custom Act 2017 explicitly states that goods crossing the border or being transshipped are not subject to tax or duty. Only restriction is that good MUST be re-exported within 30 days from the dte of arrival, otherwise they will be imported (with payment of duty and VAT) or seized and actioned/destroyed.
Section 102 of Custom Act says that “Any person bringing in goods for transit or transshipment out of the Kingdom shall submit a declaration pursuant to the forms and follow the rules, procedures and conditions specified by the Director-General. The goods under paragraph one are not subject to a duty payment if the terms prescribed in paragraph one are complied, and such goods are brought out of the Kingdom within thirty days from the date of their entry into the Kingdom.”
Are goods in Transit or Transshipped subject to Custom control?
According to Section 104 of Custom Act, “In case there is a reasonable doubt that goods brought in for transit or transshipment have one of the following characteristics, a custom officer shall have a power to inspect or search such goods without a warrant:
- Goods possessed to be used in terrorism or other matters in connection with the terrorism;
- Types of goods, a transportation or transfer of such goods may affect international stability, peace or security;
- Goods with false declaration of their origins;
- Goods in violation of the laws related to transit and transshipment.
Following the result of inspection, goods may be released or, in case mentioned above, may be seized and destroyed or shipped back to the origin (section 105)
Can be goods in Transit or Transhipment repacked or modified?
Yes, it can be done under Custom Officer’s control. Section 126 of Custom Act 2017 says: “An import and an export duty shall be exempted for goods released from a bonded warehouse to be exported out of the Kingdom, whether or not they are in the same condition as at the time of their importation.’ This means that goods may change condition (or HS family) without being subject to tax.
When is Transit Trade and Transshipment in Thailand advisable?
Transit Trade and Transshipment in Thailand are useful when the origin and destination are not directly connected for many reasons: no direct vessel connection, restrictions between two Countries, lack of Agreements between Country of origin and of destination.
Siam Trade Development offer advisory and consultation in case you are considering for your goods a Transshipment in Thailand.