Thailand's Finance Ministry is preparing to propose an increase in the excise tax on fully imported electric vehicles (EVs) to at least 30%, with the revised rate expected to take effect on January 1st, 2027, according to a ministry source.

The proposal is expected to be submitted to the Cabinet within two weeks and would apply to completely built-up (CBU) electric vehicles imported without locally produced components. The source said the measure aims to support manufacturers that have invested in Thai factories and supply chains, while encouraging brands that rely on imports to establish local production facilities.

Electric passenger vehicles that do not qualify for preferential treatment currently attract a 10% excise tax, while eligible vehicles receive a reduced rate of 2%. Under the proposal, the highest excise tax rate for fully imported EVs would increase to at least 30%.

Imported EV prices expected to rise

The proposed increase would raise the cost of fully imported EVs from January 1st, 2027. For example, an imported EV valued at THB 1 million (US$ 29,820) currently incurs approximately THB 100,000 in excise tax at the 10% rate. If the rate rises to 30% or more, the tax payable would increase, potentially raising the vehicle's retail price by at least THB 200,000, depending on the final tax structure and manufacturers' pricing decisions.

Consumers considering fully imported EVs may therefore have an incentive to purchase them before the end of 2026. According to the source, the proposed increase would not apply to EVs manufactured domestically under qualifying conditions.

Tax policy shifts towards local production

Thailand introduced EV incentives under the EV 3.0 and EV 3.5 programmes several years ago. These initially permitted vehicle imports while requiring participating manufacturers to compensate through domestic production.

Under EV 3.5, manufacturers importing vehicles through the programme must produce two locally manufactured vehicles for every imported vehicle in 2026. The requirement will increase to three locally manufactured vehicles for every imported vehicle in 2027. The policy has contributed to EV investment and the development of vehicle production facilities in Thailand.

In September, the National Electric Vehicle Policy Committee agreed in principle to revise vehicle excise taxation according to five principles, including local investment, high-value domestic content and equal treatment of manufacturers.

The Board of Investment (BOI) said the proposed framework would link excise tax rates to the economic value generated in Thailand through investment, local assembly, domestic supply-chain integration and skilled employment.

Local content to carry greater weight

According to the Finance Ministry source, the tax overhaul would also change how local content is assessed. Rather than relying primarily on factors such as profits, labour costs and electricity expenses, the revised approach would place greater emphasis on high-technology components manufactured in Thailand.

Under the proposed structure, manufacturers operating domestic factories and using a high proportion of Thai-made components would qualify for the lowest rates. Companies assembling vehicles locally but relying heavily on imported parts would face an intermediate rate, while fully imported vehicles from manufacturers without production facilities in Thailand would attract the highest rate.

Existing BOI incentives separately require Made in Thailand certification from companies seeking additional benefits linked to local content. The BOI sets minimum local-content requirements of 40% for battery electric vehicles and 45% for plug-in hybrid vehicles.

Future taxes to focus on emissions and domestic value

The source said Thailand's longer-term automotive excise tax policy would place less emphasis on favouring particular propulsion technologies. Instead, carbon dioxide emissions and the economic value generated domestically would become more important criteria.

Vehicles with lower emissions would qualify for lower tax rates, regardless of whether they use battery-electric, range-extended electric or hybrid technology. The government intends to incorporate emissions and domestic economic contributions into the tax structure while accounting for manufacturers' investments in Thai factories, workers and parts suppliers.

In September, the BOI reported that electric and hybrid vehicles accounted for 55% of Thailand's new-car market in the first seven months of 2026. This prompted a broader review of automotive taxation as Thailand seeks to maintain vehicle production across multiple propulsion technologies.

Government outlines plans for domestic automotive production

The Finance Ministry source rejected suggestions that the proposed increase was designed specifically to favour Japanese carmakers. Instead, the source described it as part of a longer-term strategy that began with attracting EV investment and subsequently focused on developing local supply chains and increasing domestic production and component requirements.

Thailand aims to link rising EV sales to manufacturing investment, technology transfer and employment, rather than relying primarily on imported finished vehicles.

"The excise tax restructuring is an important step towards genuine vehicle production under the Made in Thailand standard," the source said, adding that the policy was intended to maintain confidence in Thailand as a regional automotive manufacturing hub.