The Thai government this week agreed to suspend the local excise tax on battery-powered electric vehicles (BEVs) for a period of three years to help encourage local sales, according to local reports.

The tax grace period will start at the beginning of 2020 and run until the end of 2022. It will apply only to EVs produced under projects that qualified for Board of Investment (BoI) promotional privileges which currently incur an excise tax rate of 2%. 

It does not apply to imported models while EVs produced outside the BoI’s investment promotion programme will continue to incur an excise tax of 8%.

The tax holiday is designed to encourage investments in this segment and give vehicle manufacturers time to establish a local market for these vehicles.

The government ultimately wants vehicle manufacturers to establish regional production hubs for EVs in Thailand.

The government has also come under strong pressure in recent months to respond to rising air pollution levels, including ‘toxic’ fine dust, prompting it to bring forward Euro 5 standards for diesel fuel to 2023 from 2025.

The Thai government this week also agreed to reduce excise taxes on low-polluting local pickups, including from 2.5% to 2% on passenger pickup vehicles that emit less than 200g of CO2 per km and less than 0.005 micrometres of particle matter, and from 4% to 3% on pickup trucks.

Pickups trucks that release more than 200g/CO2 per km and emissions of less than 0.005 PM will be taxed at 5% instead of 6%.