The government is preparing to announce an increase in the excise tax rate for 100% electric vehicles (EV) fully imported as complete built units (CBU) to about 30%, up from the current roughly 10%. The decision is expected to be finalized and officially announced by September. Ekniti Nitithanprapas, Deputy Prime Minister and Minister of Finance, serving as chair of the EV board, emphasized in a special interview with Bloomberg the necessity of protecting the domestic automotive industry. Since customs duties cannot be raised due to free trade agreement (FTA) commitments, excise tax must be used as the primary tool to encourage real investment.
New 3-tier excise tax structure for EVs.
The Excise Department is shifting strategy from using budget subsidies to implementing a tax structure based on investment proportion and local content.
Level 1: Lowest tax rate.
Target group: Domestic manufacturers with high local content.
Investment conditions: Establish vehicle production bases in Thailand with high use of local components or produce key EV parts domestically.
Level 2: Medium tax rate.
Target group: Importers conducting market trials.
Investment conditions: Import vehicles to test the market with concurrent plans for investment and production in Thailand.
Level 3: Highest tax rate (approximately 30%).
Target group: Importers of complete built units (CBU) for sales only.
Investment conditions: Import fully built vehicles solely for sale without plans to invest or establish production bases in Thailand (increased from about 10%).
Strategic goals and impact: Raising excise tax on Chinese EVs aims to reduce the flood of fully imported vehicles lacking local production bases by imposing the highest 30% tax on such importers first. This move intends to halt long-term imports and pressure foreign automakers to expand domestic production capacity instead. Currently, nine EV manufacturers have started production lines in Thailand, with some already exporting. Implementing this measure will help generate jobs and support local auto parts manufacturers.