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Thailand | Subsidies, duties, excise-tax incentives to encourage development and use of battery electric vehicles
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Executive summary
On 28 December 2023, the Excise Department unveiled rules, conditions and procedures outlined in the Thai Government's "BEV 3.5 policy," which will enable battery electric vehicle (BEV) importers and/or local BEV manufacturers to take advantage of a new set of subsidies and excise-tax reduction incentives for BEV passenger vehicles, pick-up trucks and motorcycles whether imported and locally assembled. The BEV 3.5 policy aims to encourage the development and use of BEVs in Thailand from 2024 to 2027.
Likewise, the Ministry of Finance (MOF) concurrently introduced its duty privilege policy and specified requirements for BEV imports for the period 2024 to 2025 under the BEV 3.5 policy.
Background
In early 2022, the MOF and the Excise Department announced rules, conditions and procedures outlined in the BEV 3.0 policy, which grants subsidies and duty and excise-tax incentives for the period 2022 to 2025. Under this policy, businesses importing BEVs between 2022 and 2023 are eligible for these incentives if they commit to commencing BEV assembly in Thailand by 2024 or 2025. The key objective of this policy is to promote the development of the BEV manufacturing sector in Thailand and to leverage Thailand toward a carbon-neutral economy by 2050.
Now, the BEV 3.5 policy aims to further position Thailand as a production hub for BEVs in alignment with the Thai Government's 30@30 plan (which aims for BEV production volumes to constitute 30% of annual vehicle production by 2030) and to encourage the adoption of zero-emission vehicles. The Thai Cabinet has approved the BEV 3.5 policy for the period starting from 2024 to 2027.
BEV 3.5 policy
Key details of the BEV 3.5 policy, effective from 1 January 2024, are as follows:
a) For both imported and locally assembled passenger BEVs
BEV type | Passenger BEVs | |||
Retail price & battery kWh | ≤THBi 2m and ≥ 10 kWh | >THB 2m but ≤THB 7m and ≥ 50 kWh | ||
BEV battery standards | Must comply with TISIii standards, pass ATTRICiii testing, and adhere to Quick Charge standards, as specified by the Ministry of Industry (MOI). | |||
Subsidy amount (per unit) based on battery size | Year | ≥ 10 kWh but < 50 kWh | ≥ 50 kWh | No subsidy |
2024 | 50,000 | 100,000 | ||
2025 | 35,000 | 75,000 | ||
2026 & 2027 | 25,000 | 50,000 | ||
Subsidy claimant party and period | BEV importers: from 2024 to 2025 Local BEV assemblers: from 2024 to 2027 | No subsidy | ||
Import tariffs | Up to 40% reduction (for the first 2 years: 2024—2025) | No reduction | ||
Reduced excise tax | 2% (from 8%) | |||
BEV local assembly requirements | Under this policy, business operators importing BEVs must locally produce any type of BEV within either of the following volume thresholds:
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Battery local assembly requirements | Battery and its parts localization to commence from 2026 | |||
i THB is the abbreviation for the Thai Baht currency.
ii TISI refers to the Thai Industrial Standards Institute.
iii ATTRIC refers to the Automotive and Tyre Testing, Research and Innovation Center.
b) For BEV pick-up trucks and e-motorcycles (locally assembled ones only):
BEV type | BEV pick-ups ≤ 4,000 kg | Motorcycles |
Retail price & battery kWh | ≤ THB 2m and ≥ 50kWh | ≤ THB 150,000 and ≥ 3 kWh |
Standards required | For locally assembled vehicles: Same as the passenger BEVs mentioned above | As specified by the Excise Department (refer to the note below) |
Subsidy amount (per unit) | THB 100,000 (Year 2024 to 2027) | THB 10,000 (Year 2024 to 2027) |
Reduced excise tax | 2024—2025: 0% (from 10%) 2026 onward: 2% (from 10%) | 1% (from 5%) |
Battery local assembly requirements | Battery and its parts localization to commence from 2026 | Not applicable |
Note: As per the memorandum of understanding, the Excise Department has established the following specifications for BEV motorcycles:
- The lithium-ion battery must be ≥ 48 volts and certified by the Thailand Automotive Institute (TAI).
- The battery must have a capacity of ≥3 kWh or a range of ≥ 75 km on a single charge. It must also pass the Worldwide Harmonized Motorcycle Emission Certification tests/procedures with Class 1 or above, as certified by TAI.
- The motorcycles must use pneumatic tires that meet one of the following standards:
- Thai Industrial Standards Institute (TISI) standard no. TIS. 2720 ??- 2017 "Pneumatic [tires] for motorcycles and mopeds" or higher
- The United Nations Regulation (UN Regulation) no.75 (00 series or higher).
- To qualify for approval, the motorcycles must meet one of the following BEV-motorcycle safety standards:
- TISI standard no. TIS. 2952 - 2018 "Vehicles of category L with regard to specific requirements for the electric power train"
- UN Regulation No. 136 (00 Series or higher)
- Obtain a certificate for a motorcycle electric powered generator model as announced by the Department of Land Transport
Business operators that have signed up for the BEV 3.0 policy may transfer unsold BEV units imported under the BEV 3.0 policy to the new BEV 3.5 policy. However, to do so, the operators must also sign a memorandum of understanding with the Excise Department to comply with the BEV 3.5 conditions. Once the transfer is completed, the business operators can then claim the BEV subsidy amount provided under the BEV 3.5 policy when these BEV units are subsequently sold and registered with the Department of Land Transport.
The purpose of this Tax Alert is to facilitate understanding of the proposals and it should not be used exclusively for tax planning without prior consultation with experts.
Contact Information
For additional information concerning this Alert, please contact:
EY Corporate Services Limited, Thailand
- William Chea
- Suthina Chua
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.