Tax Exempted to Increase the Use of Electric Cars and Electric Motorcycles
The Ministry of Finance has proposed the draft decree in accordance with the Revenue Code regarding Corporate Income Tax Exemption for Subsidies under Measures to Support the Use of Electric Cars and Electric Motorcycles. The motive of this draft decree originated from the cabinet resolutions regarding the measures for increasing the use of electric cars and electric motorcycles by subsidy to the domestic automotive industry operators who manufacture and assemble automobiles and battery electric vehicles (BEV) including pickups and motorcycles. The draft aim to provide incentives for those who are subsidized by exempting corporate income tax to reduce the cost of BEVs, resulting in higher demand and more trust from investors, leading to an increase in electric cars and motorcycles, hiring, and labor skills.
Before proposing this draft decree, the Ministry of Finance has released two announcements of the Excise Department as follows:
- The announcement regarding terms, conditions, and methods to exercise rights and measures to support the use of electric cars and electric motorcycles; The operators must meet the qualifications such as having the manufacturer located in the freezone, free-trade zone, or being the officially appointed distributors, etc.
- The announcement regarding the terms and conditions for subsidy as follows:
- The government will provide a subsidy of 70,000 baht for cars with a retail price of fewer than 2 million bath and battery size of 10 kWh to less than 30 kWh and subsidy of 150,000 baht for cars with a battery size of 30 kWh or more. In exchange to the subsidy for compensation of imports of Completely Built-Up (CBU) electric battery car, industrial operators obtaining such subsidy are required to build any car models by 2024.
- The government will provide a subsidy of 150,000 baht for BEV pickup trucks with a battery size of 30 kWh or more.
- The government will provide a subsidy of 18,000 for motorcycles with a retail price of less than 150,000 bath. That must be domestically produced, completely knock down (CKD) and completely built-up (CBU). In exchange to the subsidy for compensation of imports of completely built-up (CBU) electric battery motorcycles, industrial operators obtaining such subsidy are required to build any motorcycle models by 2024.
According to the subsidy above, the Ministry of Finance then proposed this draft decree to exempt tax from the income that limited company and limited partnership receive from the subsidy. It is an exempt income tax that must not be included in the calculation of net profit for corporate income tax purposes. However, such limited company and limited partnership must comply with Excise Department’s rules, otherwise the income from such subsidy must be included in tax’s calculation.
The draft decree will be effective from the date of publication in the Official Gazette onwards.