Industry Ministry pushes for tax benefit extension on hybrid cars
The Ministry of Industry has proposed extending the 14% tax benefit for eco-car manufacturers for another 2 years, beyond the current expiration in December this year, in preparation for transitioning to electric vehicle production.
According to news reports, the ministry is preparing to propose to the Finance Minstry’s Revenue Department that the new government considers approving a 2-year extension of the excise tax benefit to allow eco-car manufacturers time to shift towards electric vehicles (EV) production.
The production plans of nine car manufacturers (Nissan, Honda, Suzuki, Mitsubishi, Toyota, Ford, Mazda, MG, and VW), which produce hybrid plug-in electric vehicles, have been disrupted because of global chip shortages over the past 2-3 years caused by shutdowns of major automobile chip-making factories during the Covid-19 crisis.
According to Surapong Paisitpattanapong, the Federation of Thai Industries (FTI)'s automotive industry club vice president and spokesperson, the eco-car project, considered a flagship programme, has been successful in making affordable passenger cars accessible to consumers. This has resulted in an increase in the proportion of domestic passenger car sales from 10% to 42-45%, as well as continuous growth in car exports. The framework has been set for the starting price of affordable cars at 350,000-400,000 baht, and there have been additional requirements for energy-saving, with a fuel consumption rate of no less than 20 kilometers per litre, including the use of ethanol as alternative energy.
In addition, the dimensions of the vehicle frame are limited to a width not exceeding 1.63 meters and a length not exceeding 3.6 meters. The fuel efficiency must be at least 5.6 liters per 100 kilometers, complying with Euro 4 or EURO emission standards, and passing the Economic Commission for Europe (ECE) vehicle safety standards. There are also incentives and exemptions for corporate income tax for 8 years and a reduced excise tax rate of 14%, while other passenger car models are subject to a 30% excise tax, Surapong added.
Due to the success of the eco-car project in transforming the business model of the passenger car industry, Thailand is now recognised as a component manufacturer and production base that comprehensively supports the Japanese, Surapong said.
