Thailand Issues Tax Incentives for Electric Vehicle Industry

• Thailand’s Board of Investment (BOI) issued its latest incentives for the country’s electric vehicle (EV) industry.
• These incentives mainly cover tax holidays for qualified EV projects, such as for the development of hybrid electric vehicles.
• There are also tax holidays for businesses in the EV supply chain, in particular for manufacturers of battery modules and battery cells.

On November 4, 2020, Thailand’s Board of Investment (BOI) issued its latest tax incentives for the country’s electric vehicle (EV) industry.

Earlier this year, the government established the National Electric Vehicle Policy Committee (NEVPC) to accelerate the country’s national EV roadmap to produce some 1.2 million EVs by 2036.

Originally only state-agencies took on the mantle to move the industry forward, through developing the vehicle and charging station prototypes. However, through increasing incentives from the government, the sector has become increasingly attractive for the private sector.

Multinational brands, such as Chinese carmaker Great Wall Motors Co (GWM) and BMW, are expanding their internal combustion engine manufacturing base in Thailand while also aiming to develop EV facilities and a new range of EVs on their production lines. This includes battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and hybrid electric vehicles (HEVs).

BMW already operates 141 charging stations across 63 locations throughout the country. To date, the BOI has already approved some 26 EV projects, producing over 566,000 units per year.

Under the NEVPC roadmap, Thailand is looking to add between 60,000 to 110,000 EVs annually until 2022. This will then increase to between 100,000 to 300,000 by 2025 and finally between 400,000 and 750,000 by 2026.

What are the latest incentives?

The new incentive packages cover electric four-wheeled vehicles, ships, and motorcycles.

Four-wheeled vehicles

PHEV projects worth at least 5 billion baht (US$163,783,000) are eligible to receive a three-year corporate tax holiday whereas BEV projects (also valued at the same amount) will be eligible to receive an eight-year corporate tax holiday. In the case of BEVs, this also extends to research and development (R&D) expenditures.

For PHEV and BEV projects valued at less than 5 billion baht (US$163,783,000), the tax holiday is limited to three years.

However, BEV projects can ask for an extension if they meet one of the following requirements:

• Produce a minimum of 10,000 units within three years;
• Produce additional parts for production;
• Invest in R&D; or
• Projects that start in 2022.

Motorcycles, three-wheelers, buses, and trucks

Projects developing such types of EVs are eligible for a three-year corporate income tax (CIT) exemption, which can be extended under certain conditions.

Electric-powered ships

Production of vessels of less than 500 gross tonnages is eligible for eight years of CIT exemptions.

Supporting supply chains

In addition to the aforementioned vehicles, the BOI will also support supply chains by adding four types of EV parts eligible for CIT exemptions, namely, voltage harnesses, reduction gear, battery cooling systems, and regenerative braking systems.

Businesses in these four categories can receive up to eight years’ CIT exemption.

Additionally, to promote the local EV battery industry, the BOI has granted a 90 percent reduction in import duties for the next two years for raw materials used in the production of battery modules and battery cells that are not available locally.

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