Thailand Proposed EV Excise Tax Framework and Approves Higher Tax Rates for Imported EVs to Support Domestic Manufacturing

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Thailand Proposed EV Excise Tax Framework and Approves Higher Tax Rates for Imported EVs to Support Domestic Manufacturing

Introduction

Thailand is revising the excise tax structure for imported electric vehicles (EVs) as part of its efforts to strengthen the domestic automotive industry and encourage long-term investment. Recent policy developments include the EV Board’s approval in principle of a proposed three-tier excise tax structure for imported completely built-up (CBU) vehicles and the Cabinet’s subsequent approval of higher excise tax rates for imported Battery Electric Vehicles (BEVs) and Range-Extended Electric Vehicles (REEVs). The revised rates will take effect on 1 January 2027.

Background

Thailand has introduced a series of measures in recent years to promote EV adoption and domestic production. The EV 3.0 scheme offered purchase subsidies and tax incentives. Its successor, EV 3.5, reduced subsidy levels and introduced domestic production requirements to offset imports.

Despite the growth of the EV market, imported vehicles continue to hold a substantial share of sales. According to the Federation of Thai Industries, imports accounted for 63% of BEV sales in Thailand between January and July 2026.

In response, the authorities have been reviewing the EV excise tax framework as part of broader efforts to strengthen domestic manufacturing, attract investment, and increase the use of locally produced components. The policy aims to ensure that the EV market’s growth delivers greater economic benefits to Thailand through investment, employment, and the development of local automotive suppliers.

Policy Principles

On 10 September 2026, the National Electric Vehicle Policy Committee (the “EV Board”) approved in principle the restructuring of excise tax on imported completely built-up (“CBU”) vehicles under the concept of “Adjusting Taxation According to the Benefits Created for the Country.” The restructuring is guided by five principles:

  1. Linking import privileges to genuine, long-term investment in manufacturing operations in Thailand.
  2. Positioning Thailand as a regional and global manufacturing and export hub for EVs.
  3. Encouraging the use of high-value local components and raw materials, while creating employment and developing the skills of Thai workers.
  4. Ensuring fair competition between domestically produced and imported vehicles.
  5. Strengthening domestic parts manufacturers and building a more competitive, resilient local supply chain.

Proposed Three-Tier Excise Tax Structure

The framework comprises three tax tiers, differentiated by manufacturing activity in Thailand and the level of local content:

  1. Lowest rate: For manufacturers with production facilities in Thailand that achieve high local content, particularly through locally manufactured components.
  2. Intermediate rate: For manufacturers with production facilities in Thailand that still rely on imported components but show potential to increase local content over time. Certain imported models intended for market testing may also be considered under the proposed framework, subject to conditions.
  3. Highest rate: For fully imported CBU vehicles sold by operators without manufacturing facilities in Thailand.

The framework also proposes revised criteria for calculating local content:

  • Current approach: Profit, labour costs, and electricity costs may be included in the calculation.
  • Proposed approach: Greater weight is placed on high-technology components, with the excise tax mechanism applied alongside the Made in Thailand standard.

The specific rates for each tier and the detailed local content criteria remain subject to further clarification through official measures.

Current Status

On 3 November 2026, the Cabinet approved an increase in the excise tax rates for imported Battery Electric Vehicles (BEVs) and Range-Extended Electric Vehicles (REEVs). The rate for imported BEVs will increase from 10% to 35%, while the rate for imported REEVs will increase from 15% to 35%. The revised rates will take effect on 1 January 2027.

The adjustment aims to address the competitive imbalance between manufacturers that have invested in domestic production and those that rely on imported completely built-up vehicles. It is intended to encourage investment in local manufacturing and strengthen Thailand’s domestic automotive production base.

However, the Cabinet’s announcement does not specify whether these approved rates correspond to the highest tier (Tier 3) or any other tier under the proposed three-tier excise tax structure. The specific tax rates and implementation criteria for each tier therefore remain subject to further clarification through official measures.

In addition, the Excise Department has been assigned to discuss special excise tax rates for new investors, particularly those investing in domestic vehicle manufacturing and the production or assembly of key automotive components.

Key Takeaways

  • On 10 September 2026, the EV Board approved in principle a restructuring of the excise tax framework for imported CBU vehicles, linking tax treatment to domestic investment, manufacturing activity, and local content.
  • The proposed framework comprises three tax tiers based on manufacturing activity in Thailand and the level of local content.
  • On 3 November 2026, the Cabinet approved an increase in excise tax rates on imported BEVs (from 10% to 35%) and REEVs (from 15% to 35%), effective 1 January 2027.
  • The Cabinet-approved rates have not been explicitly linked to any specific tier under the proposed three-tier framework.
  • The overall policy aims to encourage investment, promote fair competition, strengthen local supply chains, and support employment and skills development.

Author: Panisa Suwanmatajarn, Managing Partner.

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