Thailand's MoF wants an 'agile' excise tax structure: BEVs priority, PHEVs second, 45-litre fuel tank max, 80 km range min

Thailand is currently the biggest market for battery EVs (BEVs) in Southeast Asia. Nearly 15% of new cars sold in Thailand are BEVs, an adoption rate that’s higher than even the USA (~7%).

At the same time, Thailand is not convinced that it should adopt a European Union-style ‘all-in’ approach in promoting BEVs, reasoning that the automotive industry is still in a state of flux and a one-track, BEV-only approach may not be the correct one.

Deputy Finance Minister Paopoom Rojanasakul told the Bangkok Post "The dust has not yet settled", as either battery electric vehicles (BEVs) or plug-in hybrid electric vehicles (PHEVs) could become the market leader.

In China, PHEV registrations are grouped together with BEVs, collectively known as New Energy Vehicles (NEVs), as EVs are known there. PHEVs contribute about half of NEVs sold there.

"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.

Currently, Thailand’s excise tax for motor vehicles is based on a combination of vehicle type, engine capacity, and CO2 emissions.

Hybrids that emit less than 100g of CO2 per km are taxed at just 4%. Small cars with an engine capacity of 1.3-litre or less, compatible with E10 gasohol biofuel, and emits no more than 100g of CO2 per km are taxed at 12%, while other passenger cars are taxed between 25% and 50%, depending on their CO2 emissions. Pick-up trucks are taxed between 2.5% and 13%, depending on their cabin type (Single Cab, Space Cab, or Double-Cab), while SUVs derived from pick-up truck underpinnings are taxed at between 25% and 50%.

All BEVs are taxed at just 2%.

Earlier this year, the Thai government announced a new excise tax structure for hybrids that will come into force by 2026.

New requirements for PHEVs

The new structure will split PHEVs from regular hybrids (HEVs), taxed at 5%. However, PHEVs with an EV-only driving range of 80 km or less, with a fuel tank capacity of more than 45 litres, will be taxed at 10%. High-performance PHEVs with engine capacities reaching 3.0-litre or more will be taxed at 30%, thus closing the loophole for luxury PHEVs.

Regular hybrids will be taxed at a higher 6%, before increasing to 8% in 2028, and 10% by 2030. However, in July, the government is putting this on hold, maintaining the 6% rate until 2032.