Thailand plans tax breaks for carmakers using Thai parts

Thailand's Finance Ministry plans to introduce tax incentives by September to encourage foreign vehicle manufacturers to establish production facilities in Thailand and use more locally made components.

Finance Minister Ekniti Nitithanprapas said the proposal, which is expected to go to the cabinet for approval next month, would offer lower excise tax rates to manufacturers that build production bases in Thailand and buy parts from Thai suppliers.

"The key to the measure is to provide a tax advantage," Mr Ekniti said.

Lower excise tax for local production

Under the proposed scheme, investors that build factories and use components made by Thai suppliers would pay a lower excise tax rate, Mr Ekniti said. Carmakers importing completely built-up vehicles without a production base in Thailand could face higher rates.

The programme would cover almost all vehicle categories. The government says it is intended to promote technology transfer to Thai workers and engineers, while supporting long-term income growth.

No change has yet been made to excise tax rates. The cabinet is expected to consider the proposal this month, with the ministry aiming to have the incentives in place by September.

Part of a wider investment drive

The measures are part of the government's "Thailand's New Horizon" strategy, designed to attract firms shifting production bases because of geopolitical tensions.

Mr Ekniti said the strategy is intended to ensure people across Thailand benefit from foreign investment and can access new economic opportunities.

Thailand's economic growth potential was about 5% before the 1997 Asian financial crisis, but has dropped to around 2%, he said. He attributed the decline to public and private investment falling from 40% of GDP to 23%.

The government aims to lift total investment to 30% of GDP and raise annual economic growth to more than 3% within four years.

Mr Ekniti said foreign investors were increasingly selecting Thailand because of its safety, broad trade links and infrastructure. Recent investment projects have focused on technology-intensive sectors including artificial intelligence, semiconductors, electric vehicles and robotics, he added.

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9 August 2026