New Tax Rules to Encourage Shift from Gas-Powered to Eco-Friendly Vehicles

Automobile excise taxes are being revised to accelerate the move from gas-powered vehicles to electric and hydrogen-powered models. The Excise Department aims to balance economic growth with sustainability by using taxes as incentives.

The department will revise battery taxes, focusing on energy density and lifespan to promote efficient energy use. Plans also include introducing a carbon pricing system for oil and fuel products, which will reflect varying carbon emissions. Despite a higher tax burden on these products, the department assures it will minimize impacts on consumers.

A carbon tax proposal, set at 200 baht per tonne of carbon dioxide emissions, will be submitted to the cabinet. Tax rates will vary based on fuel types and emission levels.

Hybrid and mild hybrid vehicles will benefit from low tax rates for seven years, helping the industry transition toward electric vehicles. Hybrid models emitting 100 grams of CO2 or less per kilometer will face a fixed 6% tax rate from 2026 to 2032. Those emitting between 101 and 120 grams will have a 9% tax rate.

Policies for mild hybrids, which combine gas engines with electric motors, will also support production growth. Tax rates are set at 10% for emissions below 100 grams and 12% for emissions above that threshold.

Unlike prior policies with annual rate hikes, these fixed rates create stability for manufacturers and consumers. With Thailand positioned as a potential hub for hybrid and EV production, the measures align with global sustainability trends.