Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

February 7, 2024
2024-0356

Thailand | Subsidies, duties, excise-tax incentives to encourage development and use of battery electric vehicles

  • The BEV 3.5 incentive policy represents the Thai Government's continuing push to drive development and transition toward zero-emission vehicles and to promote Thailand as the battery electric vehicle (BEV) production hub for the ASEAN region.
  • This policy offers a business operator subsidy; reduced duty and excise-tax treatment on BEV imports during 2024 and 2025 is available, provided the operator commits to commence local assembly of BEVs by 2026 or 2027.
  • This policy is limited to BEV passenger vehicles, pick-ups and motorcycles.
 

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:

  • 1:2 ratio for every BEV unit imported if local BEV production is fulfilled by December 2026
  • 1:3 ratio for every BEV unit imported if local BEV production is only fulfilled by December 2027

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

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor
 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct