First-Time Car Buyers to Receive an Excise Tax Deduction

(15/09/2011)

The Government believes that its first-car buyer program will contribute to the growth of the automotive industry, which has become a driving force for the Thai economy. The Cabinet, during its meeting on September 13, approved guidelines to refund taxes for first-time car buyers. At the same meeting, it approved a central fund of 100 million baht from the 2012 national budget to carry out the program and another fund of 30 billion baht from the 2013 national budget for tax refunds. According to the scheme, car buyers eligible for tax refunds must be at least 21 years old. They must hold ownership of the cars for at least five years. Their vehicles must not be worth more than one million baht, with engine capacity not exceeding 1,500 cc. The cars must also be manufactured in Thailand, excluding those produced with imported used parts. The refund will be made from 1 October 2013 onwards. The Ministry of Finance reported that the car buyers would be refunded the actual amount of tax they have paid but the ceiling of the refund is set at 100,000 baht per unit. Another requirement is that the cars must be purchased from 16 September 2011 to 31 December 2012. Under the previous plan, the period was set for 1 October 2011 to 31 December 2012. The Cabinet was afraid, however, that if the program began on October 1, the car business would slow down for the time being, as buyers would wait until October 1, so that they would benefit from the scheme. The first-time car buyer program was in response to the Government’s policy of raising the people’s standard of living by enhancing domestic purchasing power and creating balance and strength with quality in the macroeconomic system. In this way, the Government has pledged to introduce tax measures to reduce the general public’s burden of purchasing such essentials as the first house and car. The Ministry of Finance stated that the first-car buyer program would enable at least 500,000 low-income earners to have the opportunity to own a car. At the same time, it would enable the Government to earn more from the collection of corporate income tax, value-added tax, and car excise tax. Thailand stands a good chance of expanding the automotive industry, as several foreign investors, especially the Japanese, have moved their production bases to the country. In 2010, Thailand produced 1.6 million vehicle units, an increase of 60 percent and the highest ever in the history of Thai auto manufacturing. Out of this number, 900,000 units were exported, a 68 percent increase, and 700,000 units were sold domestically, representing a 27 percent increase.