Thailand’s government has approved a future restructuring of the country’s vehicle excise tax away from rates based on engine size to one dependent on the quantity of carbon dioxide emissions.

The new tax structure is due to take effect on January 1, 2016. The government is aware that car manufacturers were severely affected by last year’s floods, and are, at present, serving domestic demand, which has also been boosted by the government’s first-car scheme. However, it is anticipated that, from next year, exports will again become a major factor, and the new excise duties are designed to align Thailand’s automotive industry towards producing vehicles that meet global standards.

Under the present excise tax structure, tax rates increase according to engine size on the assumption that larger engines consume more fuel. For example, a passenger car with an engine of 2,000cc or less pays a tax of between 22% and 30%, whereas a car with an engine of more than 3,000cc pays 50%. Even electric, fuel cell and hybrid vehicles currently pay a tax based on engine size – up to 3,000cc at a rate of 10%, and above 3,000cc at 50%. Read More