4 Insights on Thailand’s Bonded Warehouse

Currently, rental bonded warehouses in Thailand have gained much popularity among business people.   Bonded warehouses are especially useful when firms engage in importing and exporting activities.  The bonded warehouses offer many benefits, such as exemption taxes related to importing and exporting activities. Firms can also delay or omit tax payments advantageously, and this benefit can help firms enhance their financial strength and reduce the overall costs.  In this article, we have compiled the benefits of Thailand's rental bonded warehouses, and you can find these practical insights to your business advantages.

1. What is a bonded warehouse?

In Thailand, we can loosely classify a bonded warehouse as a specialized warehouse, in which we can store imported goods without having to pay for import and export duties. Under the appropriate licenses and Thailand's custom laws, you can stock your imported products with tax exemption benefits up to 2 years or more.  You only pay the taxes when you dispatch the goods from the bonded warehouses. As a result, many firms can enjoy this benefit when they rent bonded facilities.

For ordinary warehouses, when you import your products from foreign countries, you will have to pay the import duties within 2 months and 15 days. The rental bonded warehouses offer the opportunity for businesses to delay the import-duty payments,  thereby allowing them to allocate their capitals on other business functions better. This benefit can lower the overall costs of imported-oriented enterprises significantly.

The establishment of a bonded warehouse must comply with conditions set by Thailand's Customs Department.  The landlords of the rental bonded warehouses must obtain the proper licenses. Currently, warehousing and real estate companies are offering services in leasing a bonded warehouses either partially or exclusively. If you are interested in renting a bonded warehouse, you should discuss with the landlord whether your products can meet the requirements set by the Thai customs as well as the zoning laws. Alternatively, some operators offer warehousing solutions whereby they will manage your imported inventory in bonded warehouses for you. You can explore the various choices that best suit your operations.

 2. What can you store in Thailand's bonded warehouses?

We can categorize three main product types, which you can store in a bonded warehouse as followed:

1. Imported finished goods

2. Imported semi-finished goods

3. Imported raw materials

 You can store almost any imported products in a rental bonded warehouse and enjoy its tax benefits. With its benefits, you can postpone the duty payment until you dispatch the goods from the bonded warehouses. On the other hand, for conventional warehouses, you have to pay for import taxes immediately when you have importing activities.

3. Types of bonded warehouses for rent.

From its direct benefit, businesses with importing activities use rental bonded warehouses in their operational processes auspiciously. Moreover, Thai customs allow firms to engage in various activities (not just for storage) and still enjoy their tax benefits. We can classify the typical business activities in these three primary areas.

 3.1 The bonded warehouse used for the storage of goods.

 1) General Bonded Warehouse

 2) Bonded warehouse for storing liquefied petroleum gas

 3) Bonded warehouse for garage or boat building

 4) Bonded warehouse for oil reserve storage

 3.2 The bonded warehouse used for displaying and selling tax-free items.

 1) Bonded warehouse for duty-free shops

 2) Bonded warehouse for displaying or exhibiting purposes

 3) Bonded warehouse for duty-free goods on commercial flights

 3.3 Bonded warehouse for producing, mixing, assembling, packing, or operating activities.

 1) A bonded warehouse used as the production facility

 2)A bonded warehouse for raw materials and equipment used in factories.

 4. Rental bonded warehouses offer other vital strategic benefits.

In this section, we would highlight some of the essential advantages of Thailand's rental bonded warehouses.

4.1  Exemptions on import and export duties

As previously mentioned, when you engage in importing and exporting products, you must pay severe taxes. However, with the bonded warehouses, the Thai law allows business operators to postpone the import tax payments up to 2 years. This benefit is even more useful when your business has to reexport to other countries. You can store your products in Thailand's rental bonded warehouses, and reexport your products to your customers in a foreign country. In this manner, you can avoid paying for importing or exporting charges. This benefit can help your products' costs to become more competitive in the global market.

4.2 Reduce import tax payments for larger import lots

Typically, when you place your orders in larger lots, the suppliers are willing to offer lower prices. Yet, with standard rental warehouses, you have to pay excessively and immediately on import taxes for your order surpluses. You have to spend a vast amount of money on import charges before your products can clear customs or the ports.

Most business operators, who do not wish to allot unnecessary amounts of their capitals in import tax payments, can exploit the benefit of rental bonded warehouses. These specialized warehouses allow you to import in a large quantity, and pay for import taxes marginally- only when you sell your products to the domestic market. You only pay import taxes in small amounts as you sell your products to the customers. This benefit helps you better utilize your capital and free up your cash flows.

4.3  Make import-tax payments only when you have customers' orders.

Related to the previous advantage, you can make large import purchases and store your products in the rental bonded warehouse until you receive your customers' purchases. You can delay paying for import duties. The Thai custom allows you to postpone the imported taxes for up to 2 years. Many companies use this time frame to sell their products to consumers. The two-year period can help you increase your selling opportunities. If you cannot sell some products that you have imported, you can still avoid the import duties by reexporting your products to other countries or utilizing the re-entry programs. Nevertheless, the 2-year timeframe is usually more than sufficient for most companies to sell their imported goods.

In sum, we have outlined crucial information on Thailand's bonded warehouse rentals. This specific rental warehouse is beneficial for businesses that have import and export activities. The bonded warehouses can significantly help lower your tax payments, increase your competitiveness internationally, and liquidate your cash flows. These financial benefits can help your business run more competitively.

If you wish to learn more on Thailand's bonded warehouses, please download information from Thailand's customs below:

http://www.customs.go.th/data_files/6e69a3efe9177be59c0a2613c0c08f17.pdf

Finally, if you are interested in renting a high-quality factory or warehouses in Thailand, please feel free to contact us anytime. Our properties have complete functions, and they are in excellent locations. Plus, we support our customers with free repair services throughout the leases as well as a full range of customer support services. Our projects have high-security systems with 24-hour security guards, and CCTVs. 

Sources:

http://www.customs.go.th/cont_strc_simple.php?ini_content=tax_incentive_160928_02_160928_01&ini_menu=menu_tax_incentive&xleft_menu=menu_tax_incentive_160928_02&lang=th&left_menu=menu_business_160421_03_160725_02

http://www.customs.go.th/data_files/6e69a3efe9177be59c0a2613c0c08f17.pdf

https://bit.ly/2zdFS98