Thailand Levels PHEV Taxes, Boosting Auto Industry by 2026
Thailand is preparing to overhaul its tax structure for plug-in hybrid electric vehicles (PHEVs) to attract investment and solidify its position as a regional automotive production hub. The Excise Department plans to eliminate stipulations impacting excise tax, including fuel tank size and CO2 emission criteria. These changes, scheduled for implementation in 2026, represent a significant shift in the country’s approach to promoting electrified transportation.
Following a visit to BMW and BYD manufacturing facilities at the Amata City Rayong Industrial Estate, Deputy Finance Minister Paopoom Rojanasakul announced the upcoming revisions. Currently, PHEVs face varying tax rates based on electric range and fuel tank capacity. Vehicles with at least 80 kilometers of electric range and a fuel tank no larger than 45 liters are taxed at 5%; those failing to meet these specifications are taxed at 10%. This system, while seemingly incentivizing efficiency, has proven problematic.
Mr. Rojanasakul explained that tying tax benefits to fuel tank size discourages manufacturers from establishing production bases in Thailand. Global variations in fuel tank requirements necessitate vehicle modifications specifically for the Thai market, increasing complexity and costs. Similarly, linking the tax rate to CO2 emissions inadvertently prioritized internal combustion engine (ICE) technology improvements over advancements in battery technology—a crucial element for broader EV adoption.
The revised tax structure, currently under review and pending cabinet approval, aims to streamline the process and foster a more competitive environment. While Mr. Rojanasakul did not disclose specific tax rates, he emphasized the importance of creating an attractive investment climate.
Kulaya Tantitemit, Director-General of the Excise Department, echoed the Deputy Minister’s sentiments. She highlighted that removing the fuel tank size requirement will lessen the burden on manufacturers, who currently face costly and time-consuming safety tests for vehicles modified to meet Thai standards. This change aligns Thailand’s regulations with international norms, reducing production costs and increasing the country’s attractiveness to global automakers. Harmonizing range requirements with international standards will also ensure that PHEVs produced in Thailand meet global consumer demands, both domestically and for export.
This strategic move is expected to boost Thailand’s automotive sector, enhancing its competitiveness during the transition from traditional ICE vehicles to electrified alternatives. By removing unnecessary barriers and focusing on promoting advanced battery technology, the government aims to accelerate the adoption of cleaner transportation and secure Thailand’s future as a leading automotive manufacturing center in the region. This shift also reflects the government’s recognition of global automotive industry trends and its commitment to policies supporting sustainable growth and innovation.
