The business sector supports automotive tax restructuring efforts, which aim to encourage genuine investment and production in Thailand while ensuring local auto parts manufacturers and small businesses benefit from the policy.
Pimjai Leeissaranukul, chairwoman of the Federation of Thai Industries (FTI), said the group supports the principle behind these measures.
Thailand’s automotive and auto parts industry across the entire supply chain generates more than 10% of GDP, comprises more than 2,500 companies and supports employment for more than 800,000 people.
The measures must therefore deliver tangible benefits that extend to parts manufacturers and support industries and small and medium-sized enterprises (SMEs), she said.
The new tax structure should serve as an incentive for genuine investment and production in the country, taking into account the economic value that businesses generate for Thailand, including the use of locally produced parts, technology transfer, workforce skills development and the integration of SMEs into the modern automotive supply chain, said Mrs Pimjai.
“The FTI is ready to support efforts to advance the restructuring of automotive excise taxes and to serve as a facilitator between the government, automakers, parts manufacturers and relevant associations, gathering information and feedback from the industrial sector to help develop measures that are appropriate, clear and practical to implement,” she said.
Likewise, Poj Aramwattananont, chairman of the Thai Chamber of Commerce, said the chamber supports the tax rejig as it promotes fair competition and encourages businesses to invest, manufacture, create jobs and develop supply chains in Thailand more effectively.
“The promotion of electric vehicles [EVs] should not only position Thailand as a market for these vehicles, but also elevate the country into a manufacturing and export hub for next-generation vehicles,” said Mr Poj.
“The more companies invest, produce locally, use Thai parts, create jobs and facilitate technology transfer, the greater the incentives they should receive in return.”
The chamber urged the government to quickly clarify key details, particularly the required proportions of local content and regulations governing imports of fully built-up vehicles.
He said such imports should be subject to appropriate volume and time limits, with import privileges allocated based on each manufacturer’s level of investment and the economic value it creates for Thailand.
On Thursday, the EV Board agreed to introduce a three-tier excise tax structure for EVs, with the highest rate applying to completely built-up imports.
Under Tier 1, EVs that meet local content requirements or are produced domestically are subject to a relatively low excise tax rate.
Under Tier 2, vehicles assembled domestically using imported components are subject to a higher excise tax rate than those under Tier 1. Tier 3 applies to EVs imported as complete vehicles, resulting in the highest rate.
The current EV excise tax rate is 2% for vehicles produced at domestic plants that received promotion from the Board of Investment, and 8% for vehicles produced domestically without such promotion. For imported EVs, the excise tax rate is 10%.
The excise tax rate for the third tier should probably be higher than 10%, noted Pornchai Thiraveja, director-general of the Excise Department.
CLEARER RATES NEEDED
Hyundai Mobility Thailand, a subsidiary of South Korea’s Hyundai Motor Group, called on the government to clearly define the three tiers of excise tax rates for EVs as the details are crucial for automakers to plan production and sales strategies.
Wallop Chalermvongsavej, managing director of Hyundai Mobility Thailand, said carmakers are prepared to comply with the new tax structure as long as the measures are transparent and ensure fair competition across the industry.
“The latest EV Board meeting has not provided the clarity that automakers had hoped for, raising concerns over further delays in implementation,” Mr Wallop said.
Investment and business decisions, particularly those related to vehicle manufacturing in Thailand, remain on hold pending clearer details, he noted.