Last week, manufacturers threatened to move their Bt100-billion business to Vietnam after the Customs Department ordered them to pay Bt1 billion in back taxes and Bt2 billion in fines.

The higher tax obligation stems from a change in the department's harmonisation rule, which amended the 1-per-cent duty on steel containing less than 0.6-per-cent silicon - categorised as a resource that cannot be found in Thailand - to 12 per cent.

After a luncheon talk at the Dusit Thani Hotel yesterday in which Prime Minister Surayud Chulanont met with Japanese businessmen, Finance Minister Chalongphob Sussangkarn told the press it was all a mistake.

The Customs Department has already submitted new tax rates for imported steel in order to relieve the high cost of raw materials, he said.

Surayud said he had already assigned the Finance Ministry to address the concerns of those companies, which are mostly based in Japan.

"I'm confident this problem can be solved and that those manufacturers will not move their production bases to Vietnam," he said.

Chalongphob said his ministry would also propose to the Cabinet a refund of taxes collected from mirror manufacturers since January 1, 2006.

He admitted that his ministry was at fault, as its technical mistake made the operators pay more in taxes after the tax structure had changed eight levels.

Chalida Ekvitthayavechnukul

The Nation