Thailand Cuts EV Taxes for Carmakers Using Local Parts

Thailand is moving to reshape its vehicle tax policy, with a strong new push rewarding vehicles built using local parts.

This means imported electric vehicles (EVs) with a higher proportion of Thai-made components could soon enjoy lower excise duties. Those that depend heavily on foreign parts may face steeper rates instead.

Thailand’s Deputy Finance Minister Paopoom Rojanasakul reportedly said the goal is to strengthen the domestic auto parts industry and encourage manufacturers to buy local.

Currently, fully imported vehicles are taxed at a higher rate. The new plan aims to reduce that burden for EVs with more local content, linking tax benefits to industrial development.

Paopoom said the Thai Finance Ministry will work closely with the Board of Investment (BoI), which is expected to introduce measures to boost local sourcing among carmakers.

Former Prime Minister Thaksin Shinawatra has also called for higher taxes on imported EVs that use few Thai parts. He noted that free trade agreements, particularly with China with zero-tariff, made it harder for local players to compete.

When Thailand signed the ASEAN-China FTA about 20 years ago, EVs were not widely used. Officials believed the term referred to small vehicles like golf carts and did not expect them to affect the market.

A Finance Ministry source said pickup trucks would likely be the first category to have excise taxes tied to local content, as Thailand is already a major production base for pickups.

The BoI views the auto industry as a key driver of the economy. Over 2,000 local suppliers employ about 900,000 people. Increasing local content supports not just growth but also livelihoods.

EV adoption in Thailand is rising fast. Registrations jumped from 84,500 in 2022 to 206,000 in 2024. In that time, 644 EV-related projects applied for incentives, with total investments exceeding TBH280 Billion (RM37 Billion).

Government subsidies have helped fuel demand, but they come with strict conditions. Under the latest EV3.5 scheme, companies must produce twice as many EVs locally as they import by 2026, and triple by 2027. If they fall short, the subsidy amount must be returned.

The message is clear. To succeed in Thailand’s EV market, manufacturers must commit to building locally. With the right incentives, Thailand aims to turn EVs from an import trend into a domestic success story.

Source: Bangkok Post