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The structure of Thailand’s automotive excise taxes must align with global trends, particularly the shift towards the electric vehicle (EV) industry, says Deputy Finance Minister Paopoom Rojanasakul.
Referring to competition in the auto industry, he said “the dust has not yet settled”, as either battery electric vehicles (BEVs) or plug-in hybrid electric vehicles (PHEVs) could become the market leader.
“A tax structure that leans exclusively towards EVs may not be the answer. We need to maintain a balance across the entire tax system. If the global trend favours PHEVs, Thailand would still be well-positioned. Similarly, if EVs are favoured, we should be prepared,” said Mr Paopoom.
He said it is clear the world is moving away from internal combustion engine (ICE) vehicles. However, the government has refrained from imposing an excessively harsh tax structure on ICE-powered vehicle manufacturing because the production lines and supply chains for this industry are still extensive, said Mr Paopoom.
Any sudden impacts to this industry could significantly affect the national economy and domestic employment, he said, meaning tax alterations for manufacturers of ICE-powered vehicles need to be gradual.
On Feb 22, 2022, the cabinet approved the National EV Committee’s proposal to adjust the auto tax structure, aimed at positioning Thailand as a hub for EV and electric motorcycle production in Southeast Asia, while also reducing environmental impacts.
The current excise tax on ICE vehicles is based on carbon emissions. Vehicles emitting 100 grammes of carbon dioxide or less per kilometre that use E10 or E20 fuel are taxed at 25%, while those using E85 or NGV fuels are taxed at 20%. Vehicles emitting more than 200 grammes of CO2 per km are taxed 30-35%.
The new excise tax structure for ICE vehicles, effective from 2026 to 2030, incentivises the production of low-emission vehicles. In 2026, ICE vehicles emitting 100 grammes or less of CO2 per km are taxed 13%, rising to 14% in 2028 and 15% in 2030.
Vehicles emitting more than 200 grammes of CO2 per km are taxed 34% in 2026, 36% in 2028, and 38% in 2030.
For HEVs, the tax structure gradually increases from 2026 to 2030. For example, HEVs emitting 100 grammes of CO2 per km are taxed 6% in 2026, down from the current rate of 8%, then 8% in 2028 and 10% in 2030.
HEVs emitting more than 200 grammes of CO2 per km are taxed 24% in 2026 (currently 26%), rising to 26% in 2028 and 28% in 2030. In contrast, BEVs have been taxed at a rate of 2% since 2022.
For PHEVs, a new tax structure begins in 2026. PHEVs with an electric range of 80km or more and a fuel tank capacity of 45 litres or less are taxed 5%, while those with a range of less than 80 km and a tank capacity greater than 45 litres are taxed 10%. PHEVs with engines of more than 3,000cc are taxed 30%, while fuel cell EVs have a tax rate of 1% in 2026.