Thailand Plans Excise Tax Revisions to Boost Plug-In Hybrid EV Industry

Thailand’s Finance Ministry, as reported by the Bangkok Post, is preparing to propose adjustments to the excise tax conditions for plug-in hybrid electric vehicles (PHEVs) to support manufacturers and encourage electrified vehicle adoption. The Excise Department is currently drafting amendments with key considerations including a vehicle's electric range per charge and fuel tank capacity.

At present, PHEVs must achieve an electric range of at least 80 kilometres per charge to qualify for a reduced excise tax rate of 5%. Additionally, their fuel tank capacity is limited to 45 litres. If a PHEV does not meet these criteria such as having an ER below 80 kilometres or a fuel tank larger than 45 litres, it would be subject to the higher 10% excise tax rate.

A source from the Finance Ministry, speaking anonymously to the daily, stated that the proposed revisions aim to offer broader tax benefits for PHEV manufacturers. Some of these models, especially those with larger bodies such as SUVs, require fuel tanks exceeding 45 litres.

Presently, we’re struggling to think of any plug-in hybrids currently (or even previously) sold in Malaysia that would meet this qualification. While newer PHEVs routinely exceed 80km of advertised electric range, almost none would have a fuel tank with such a relatively low capacity due to them usually being larger vehicles.

Back to Thailand, under the current tax structure, these vehicles are taxed at a higher rate, and adjusting the excise tax framework would help address such discrepancies and promote wider adoption of hybrid technology as an interim solution before a full transition to EVs, which the country’s government still seems keen on pushing for.

This initiative aligns with the government’s broader strategy to facilitate EV adoption in Thailand. Since the country’s battery EV ecosystem is still developing, with insufficient charging infrastructure nationwide, PHEVs could serve as the obvious and crucial bridge between internal combustion engine (ICE) vehicles and full EVs.

In December 2024, the EV Board approved a restructuring of excise taxes for (non-plug-in) hybrid EVs (HEVs), aiming to make them more attractive. The revised tax regime, effective from 2026 to 2032, sets fixed excise tax rates based on CO2 emissions. Vehicles emitting up to 100 grams per kilometre of CO2 will be taxed at 6%, while those emitting between 101 and 120 grams per kilometre will face a 9% excise tax.

To qualify for these reduced tax rates, automotive manufacturers must invest at least 3 billion baht in Thailand between 2024 and 2027. This revision replaces the previous system, which gradually increased HEV taxes every two years. Under the old structure, the excise tax rate for HEVs emitting up to 100 grams of CO2 per kilometre would have risen from 6% in 2026 to 10% by 2030.

The government’s strategy aims to sustain Thailand’s well-established ICE vehicle manufacturing base while providing automakers with a structured transition period to embrace cleaner energy solutions, such as electric and hydrogen-powered mobility.