Thailand to cut excise tax for car production to boost local parts use

Thailand is set to implement a new excise tax reduction policy aimed at boosting its automotive manufacturing sector. The finance minister announced that the government plans to cut excise tax rates for carmakers establishing production facilities within the country. This initiative is designed to incentivize automakers to increase their use of locally sourced parts and raw materials, thereby strengthening the domestic supply chain.

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The new measure will offer direct tax reductions.

The Ministry of Finance expects to submit the proposal to the cabinet for approval by September. While specific details of the tax reductions were not disclosed, the minister confirmed that the measure will offer direct tax benefits to eligible manufacturers. This move aligns with Thailand's broader economic objectives, which include achieving potential growth exceeding 3 percent over the next four years and increasing investment to 30 percent of the nation's gross domestic product during the same period.

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The government aimed to achieve potential growth of more than 3 per cent over the next four years and to increase investment to 30 per cent of gross domestic product over the period.

Furthermore, Thailand is pursuing an ambitious goal of becoming a high-income country within the next 12 years. The government is also exploring other economic stimulus measures, such as providing financial support and loans for rooftop solar panel installations, and allocating a significant portion of a 400 billion baht borrowing decree towards a clean energy transition. An additional $700 million electric vehicle (EV) plan aims to replace up to 80,000 vehicles. Despite a recent upward revision of the 2026 growth forecast to 2.5 percent, the country's 2.4 percent growth last year lagged behind regional peers, highlighting the need for such strategic economic initiatives.

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Thailand is aiming to become a high-income country within 12 years.