- Thai government is to review the country's tax structure on vehicles to further promote green car sales.
- Hybrid, pure electric and fuel-cell cars now incur an excise tax rate of 10 percent.
- A preferential tax rate of 17 percent is offered on cars that comply with the government's eco-car program guidelines.
BANGKOK, Thailand — The Thai government is to review the country's tax structure on vehicles, with a view toward encouraging sales and production of environmentally friendly models and to promoting the adoption of more advanced environmental technologies.
Under the country's current taxation structure, vehicles that offer different environmental and economic benefits are in competition with one another, and the government may be forced to prioritize.
Current excise taxes vary between 50 percent for top-end cars and 3 percent for 1-ton pickup trucks. A preferential tax rate of 17 percent is offered on cars that comply with the government's eco-car program guidelines, while hybrid-electric, pure electric and fuel-cell cars incur an excise tax rate of 10 percent. Additional tax incentives are offered on cars able to run on biofuels, including the E85 gasoline-ethanol mix.
The government wants car manufacturers to make Thailand a global production base for small cars and pickup trucks. It is doing this through its "eco-car" program, involving cars with a maximum consumption of 1L per 20 km (about 47 mpg) and which comply with Euro IV emissions standards.
While the government also offers additional tax incentives to encourage production of small "eco-cars," it has also set a minimum production target of 100,000 units per year and a minimum investment requirement of $160 million.
Nissan Motor, which launched the first eco-car, the March, in the first quarter of 2010, complained that incentives offered on other types of "green" cars are undermining sales of the March compact. In particular, excise taxes on cars adapted for E85 fuel have been cut from 25 percent to 22 percent. This, the company feels, puts eco-cars at a disadvantage in the local market.
A broad-based committee representing the Ministries of Finance, Energy, Environment and Justice, as well as the Federation of Thai Industries and the Thai Chamber of Commerce, is to be set up to carry out the taxation review.
Dr. Areepong Bhoocha-oom, director of the Ministry of Finance's Excise Department, suggested that Thailand needs to take into account the "tremendous changes that have taken place in the global automotive industry over the last five years, particularly in terms of technology."
Dr. Areepong added, "We need to formulate an appropriate tax structure to accommodate all these changes."
Inside Line says: Biofuels are in favor at present because they help reduce Thailand's dependence on imported fossil fuels. Thailand wants to take the regional leadership in biofuel technology. — Tony Pugliese, Correspondent
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