Thailand's carbon levy slated for 2025. (Photo: Thailand.go.th)
Following Singapore, Thailand will become the second ASEAN country to implement a carbon tax. Thailand plans to levy carbon taxes in 2025, aligned with the enactment of the “Global Warming Act”. Ekniti Nitithanprapas, the head of Thailand's Excise Department, emphasized that the carbon tax will not impact the public.
Carbon tax targets oil sector
Thailand's carbon tax will initially be levied on the oil sector and is expected not to increase the overall tax burden on oils, as the new legislation will only convert a portion of the existing oil tax into a carbon tax. As a result, the general public is unlikely to be affected.
Currently, the excise tax on diesel is 6.44 Baht per liter (approximately 18 cents). Diesel emits 0.0026 tons of carbon per liter. With a carbon tax rate of 200 Baht per ton (approximately USD 5.5), a carbon tax of 0.52 Baht (approximately 1.3 cents) will be levied on each liter of diesel.
The levying of a carbon tax in Thailand is aligning with the European Union's Carbon Border Adjustment Mechanism (CBAM) regulations for five types of goods, which are set to be implemented in 2026. Especially for Thailand's steel industry, which is export-oriented and heavily reliant on diesel combustion for steel melting. Once a carbon tax is implemented domestically in Thailand, exports to the EU can avoid double taxation, helping Thai companies maintain their competitiveness.
An oil refinery factory in Thailand. The country's carbon tax will initially be levied on the oil sector. (Photo: iStock)
Vehicle taxes based on emissions
Ekniti stated that the carbon tax levying in the country will adhere to international standards, taxing emissions at the source. For example, whereas vehicle taxes were previously based on engine displacement, will now be based on carbon emissions. Vehicles emitting more than 200 grams of carbon per kilometer will be taxed at a rate of 35%, while those emitting less than 150 grams per kilometer will be taxed at 25%.
To promote the development and usage of EVs, Thailand’s government is encouraging manufacturers to facilitate EV production plants in Thailand. 22 EV companies have joined this initiative so far, anticipating to bring in an investment of over 80 billion Baht (approximately USD 2.2 billion). As of this year, EV sales have grown by 685% YoY, while the excise tax rate for EVs has been reduced from 8% to 2%, which has decreased the taxing of vehicle purchases, helping Thailand reduce over 240,000 tons of carbon emissions.
Additionally, the Excise Department is also studying the tax rates for batteries, including car batteries and power banks, with plans to standardize the rate at 8%. Ekniti revealed that in the future, differentiated rates might be invoked, such as reducing the tax rate for recycling to incentivize environmental practices.
Source: Bangkok Post
