The Thai government is set to impose the ‘highest’ excise tax rates on completely built up (CBU) or imported vehicles
The highest tax rate
Thailand’s National Electric Vehicle Policy Committee (EV Board) has decided to raise the excise tax on CBU vehicles. The EV Board’s objective behind this decision is to boost local electric vehicle (EV) manufacturing as lower-cost Chinese-made EVs dominate the Thai market.
The new tax structure has three tiers depending on the origin of the vehicle’s components. According to Ministry of Finance official Pornchai Thiraveja, fully imported vehicles will be subject to the “highest tax rate, above the current 10 per cent excise tax.” Pornchai added that imported vehicles for testing or assembly will be subject to lower tax rates. Finally, vehicles manufactured with higher levels of local content will face the lowest tax rates.
The new policy has not yet been announced in full. MoF Permanent Secretary Lavaron Sangsnit said that the would-be tax rate will be revealed by the end of the month. Manufacturers will be given time to adjust their operations to accommodate the new tax scheme. The duration of this grace period has not yet been announced but the proposal has been submitted to the Thai cabinet for final approval.
The current excise tax system mandates a ratio of 40:60 local to non-local content for vehicles. The Nation Thailand reported that the government might adjust this ratio to 50:50 to strengthen support for Thai suppliers.
Taxing EVs
Five days after the initial announcement on 10 September, Finance Minister Ekniti Nithithanprapas revealed that the upcoming excise tax could be 30 per cent. He added that the government is collaborating with the local auto industry to finalise the new rate by the end of the month.
In Thailand, low-emission vehicles such as EVs and hybrids made up 55 per cent of the market for. To support local automakers during the nationwide EV transition, the Thai government seeks to lessen the competitive pressure in the market.
“The transition of Thailand’s automotive sector must convert rapid consumer demand into long-term capital formation, localised technology, and quality employment,” said Board of Investment official Narit Therdsteerasukdi.
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