Zero-Tariff Export from Thailand

A Practical Guide for Foreign Investors

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EP 9: Common Mistakes That Cause Zero-Tariff Benefits to Be Rejected

Many foreign investors assume that once a shipment clears customs under a Free Trade Agreement (FTA), the zero-tariff benefit is secure.

In reality, that is not always true.

Zero-tariff treatment can be:

• Rejected at the border
• Suspended during verification
• Revoked during post-clearance audits
• Subject to back-duty assessments and penalties

Understanding the most common causes of rejection is essential for any export-driven investment strategy.

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Mistake #1: Assuming “Made in Thailand” Automatically Qualifies

Manufacturing location alone does not determine origin.

Customs authorities evaluate:

• Regional Value Content (RVC)
• Change in Tariff Classification (CTC)
• Sourcing patterns
• Production processes

If transformation is insufficient, the product may fail Rules of Origin tests — even if fully assembled in Thailand.

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Mistake #2: Misclassifying HS Codes

Incorrect HS code classification can:

• Invalidate origin calculations
• Apply the wrong tariff rule
• Trigger retroactive adjustments

A product may qualify under one HS code but fail under another.

HS classification errors are among the most common reasons for FTA claim disputes.

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Mistake #3: Inconsistent or Unsupported Value Calculations

For products relying on Regional Value Content thresholds:

• Cost allocation must be accurate
• Transfer pricing must be consistent
• Supporting documentation must match accounting records

If customs cannot verify calculations, preferential treatment may be denied.

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Mistake #4: Using the Wrong FTA

A product may qualify under one agreement but not under another.

Each FTA has:

• Different origin rules
• Different calculation methods
• Different documentation standards

Selecting the wrong agreement can invalidate the entire claim.

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Mistake #5: Insufficient Manufacturing Substance

Light assembly or minimal processing may not meet origin requirements.

Activities such as:

• Simple packaging
• Label changes
• Minor assembly

are often insufficient to satisfy transformation criteria.

Substance matters more than corporate form.

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Mistake #6: Documentation That Does Not Reflect Reality

A Certificate of Origin is not immunity.

Customs authorities increasingly examine:

• Actual manufacturing operations
• Material sourcing records
• Supplier declarations
• Production flow
• Transfer pricing alignment

If documentation does not match operational substance, preferential status may be withdrawn.

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Mistake #7: Designing Structure After Operations Begin

One of the most expensive errors is treating origin as an afterthought.

When companies:

• Set up operations first
• Source materials opportunistically
• Apply for FTA benefits later

they often discover that origin thresholds cannot be met without restructuring.

Origin strategy must be integrated at the design stage — not retrofitted.

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The Real Risk: Post-Clearance Audits

Many investors assume that if shipments pass customs, the matter is closed.

However, customs authorities in multiple jurisdictions conduct:

• Post-clearance origin verification
• Retroactive audits
• Cross-border cooperation reviews

If origin cannot be substantiated:

• Back-duties may be imposed
• Interest and penalties may apply
• Future FTA eligibility may be suspended

Zero-tariff risk is often retrospective — and underestimated.

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Strategic Takeaway

Zero-tariff rejection rarely results from one catastrophic mistake.

It usually results from:

• Small structural misalignments
• Weak documentation discipline
• Poor coordination between legal, accounting, and operations

The most resilient exporters treat origin planning as part of investment design — not customs administration.

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How BRW Helps Prevent Rejection

At BRW, we assist foreign investors by:

• Stress-testing origin eligibility before production begins
• Reviewing HS classification and origin criteria
• Aligning sourcing models with RVC and CTC thresholds
• Integrating FBL, BOI, tax, and customs considerations
• Preparing defensible documentation frameworks

Zero-tariff success is not about obtaining a certificate.
It is about building a structure that withstands scrutiny.

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At BRW – Boonrawee Co., Ltd., we offer comprehensive legal, business, and property consulting services to support foreign investors and business owners looking to establish and grow in Thailand.

Our services include:

• Helping you understand and comply with Thai property and land ownership laws.
• Company registration and structuring for business and property purposes.
• Applying for BOI or IEAT promotions if land ownership or special privileges are needed.
• Drafting and reviewing land lease agreements to ensure legal protection.
• Finding suitable land or property locations that match your business needs (factory, office, or commercial spaces).
• Advising on site selection for business operations, including industrial estates, office buildings, and commercial zones.
• Providing architectural design and construction services for buildings, offices, and factories, including customized designs to meet specific business requirements.
• Coordinating with professional architects, engineers, and contractors to ensure your building project complies with Thai laws and standards.

📞 Contact BRW today for expert advice and a one-stop solution to establish your business and property in Thailand!