Thailand plans lower taxes for locally produced vehicles to keep legacy auto brand factories open.
Thailand plans to restructure automotive excise taxes by applying lower rates to domestically produced vehicles and higher rates to fully built imports from companies without manufacturing investment in the country.
Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas instructed Finance Ministry permanent secretary Lavaron Sangsnit and Excise Department director-general Pornchai Theeravet to complete the new structure by September, with the revised rules targeted for implementation before the end of 2026.
The proposal follows Indonesian Finance Minister Purbaya Yudhi Sadewa’s efforts to persuade Toyota to relocate production from Thailand to Indonesia by offering incentives and other requested conditions, following Hyundai’s earlier investment in the country.
Ekniti acknowledged concerns among carmakers operating in Thailand that tax disparities could encourage production to move to neighbouring countries, as vehicles imported from some free trade agreement (FTA) partners receive lower customs-duty rates, placing manufacturers with Thai production bases at a disadvantage.
“Some groups of countries benefit from lower customs duties under FTAs, and this has become a constraint for domestic industrial development,” Ekniti said.
Thailand cannot simply increase customs duties on fully built vehicles from FTA partners to create a tariff barrier similar to measures used by the United States, so the Finance Ministry intends to use excise tax as the principal mechanism for addressing the disparity. The proposed structure would provide lower excise rates to established and new carmakers that invest in Thai production facilities, covering internal combustion engine (ICE) vehicles, plug-in hybrid electric vehicles (PHEVs) and battery electric vehicles (BEVs).
Carmakers would be required to make factory investments, use domestically produced raw materials or components and begin producing vehicles for export, while companies importing fully assembled vehicles without investing in Thai manufacturing facilities would face higher excise rates. The Finance Ministry is reviewing vehicle excise rates based on the location of manufacturing operations.
Ekniti said the restructuring could also increase government revenue because consumers choosing imported vehicles would pay higher taxes, while locally produced vehicles would retain lower rates.
“Anyone who wants to use an imported car will face a higher tax, while taxes on vehicles made domestically are already very low, this would support domestic production and employment,” he said.
The changes would be introduced through a ministerial regulation specifying excise tariff rates under the Excise Tax Act, which could be issued and implemented within 2026 without parliamentary approval.
Thailand is currently Southeast Asia’s biggest auto production centre, and serves as a major export base for some of the world’s top automakers like Toyota and Honda. Australia, the Philippines and Japan were the country’s top three car export markets last year.
Information Source : The Nation
