Thailand Approves New Incentive Package for Electric Vehicle Industry

The cabinet of Thailand (the Council of Ministers of Thailand) recently approved tax incentives in order to encourage  automobile manufacturers to shift to  Completely Built Units (“CBU”) (a CBU is the terminology when a car/bike is imported/exported to/from some other country as a complete car fully assembled. These automobiles do not require an assembly before they can be sold out to the buyers in the target country's markets) of Battery Electric Vehicles (“BEV”) - and transform the country into a production hub for eco-friendly cars.

According to the Notification on a Reduction in the Excise Tax Rate and Customs Duty Exemption for Completely Built Units of Battery Electric Vehicles ("Notification"), which was published in the government gazette on 3 May 2022, it prescribes the tax measures on the CBUs of BEVs. 

The Notification includes provisions to reduce or waive import duty tax until 31 December 2023. For a BEV priced at not more than Baht 2,000,000,  there would be three types of incentive:

• 1) if the import duty is no more than 40% due to a free trade agreement (“FTA”), the duty will be waived;
• 2) if the FTA import duty is higher than 40%, the duty will be reduced by 40%; and
• 3) for an importer who does not benefit from the FTA, the FTA import duty will be reduced to 40%.[1]

For a BEV with a battery-life in excess of 30 kilowatt-hours and with the recommended price of more than Baht 2,000,000 but less than Baht 7,000,000, there would be three types of incentive:

• 1) if the FTA import duty is less than 20%, the duty will be waived;
• 2) if the FTA import duty is more than 20%, the duty will be reduced by 20%; and
• 3) for an importer who does not benefit from the FTA, the FTA import duty will be reduced to 60%.[2]

In order to benefit from the said incentive, the BEV importer shall display the tax incentive certificate granted by the Excise Department in a clearly obvious place.[3] In the event the importer fails to comply with the terms and conditions prescribed by the Excise Department and the Excise Department notify the Customs Department to revoke the certificate of incentive entitlement, it shall be deemed that such imported vehicles are not entitled to a reduction of or exemption from the import duty under the Notification from the date of importation. The importer shall also be obliged to notify the request for duty payment under the Customs law and other relevant laws within 30 days from the date on which the rights are revoked, as well as complete the tax payment within 30 days from the date of the receipt of the notification of the amount of the tax to be paid. However, the importer would not be deprived of the Customs duty privileges in the reduction of duty rates or exemption from duty under the FTA filed at the time of the importation.[4]

The BEV tax incentive, as mentioned earlier, encourages investment and extra employment in BEV businesses located in Thailand, which is essential for economic growth and to be able to keep up with automobile manufacturers located within other ASEAN countries and other parts of the world. The BEV tax incentive package reflects ASEAN's gradual investment in environmentally friendly transportation in order to align with major car manufacturers' global shift to electric vehicles. 

This is intended merely to provide a regulatory overview and not to be comprehensive, nor to provide legal advice. Should you have any questions on this or on other areas of law, please do not hesitate to contact:

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