Thailand is set to revamp its automotive excise tax structure in order to accelerate the transition towards electric vehicles (EVs), in alignment with global trends.

The initiative, announced by Deputy Finance Minister Paopoom Rojanasakul, aims to balance the country's interests in both battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs).

As competition between BEVs and PHEVs intensifies, Paopoom highlights the necessity for a balanced tax system that will enable Thailand to remain competitive, regardless of which technology dominates on a global scale. He asserts that "a tax that focuses solely on EVs might not be the solution," emphasising the importance of adaptability in their approach.

While the shift away from internal combustion engine (ICE) vehicles aligns with global efforts, the Deputy Minister advises against abrupt tax changes that could destabilise Thailand's economy and job market, particularly given the existing ICE production lines and supply chains.

In February 2022, the Cabinet approved a proposal to revise the automotive tax framework as part of a strategic initiative to establish Thailand as a Southeast Asian hub for EV and electric motorcycle production. Currently, ICE vehicles are taxed based on carbon emissions, with rates ranging from 20% to 35% depending on emission levels.

From 2026 to 2030, the new structure will incentivise low-emission vehicles, with gradual tax increases for hybrid electric vehicles (HEVs) and PHEVs, while BEVs have benefited from a 2% rate since 2022. The revised tax structure reflects Thailand's commitment to leading in automotive innovation and mitigating environmental impacts.

In summary, this change marks a significant step in Thailand's journey towards fostering a more sustainable automotive industry, while ensuring economic stability.