The government plans to revise its free trade agreement (FTA) with China concerning a zero import duty for electric vehicles (EVs) as it affects its incentives to attract EV manufacturers to invest in Thailand, says the Customs Department.
Kobsak Phutrakul, assistant minister to the Prime Minister's Office, will chair next week's meeting on revising the China-Thailand FTA to prevent it from affecting EV investment, said customs director-general Kulit Sombatsiri.
The lack of an import duty will discourage other EV manufacturers who have higher tax liabilities, he said.
The China-Thailand FTA will come into effect early next year, covering 703 items including EVs and agricultural products, said Mr Kulit.
Chinese EVs are expected to pay an import duty of 20%.
Thai organisations, including the Office of Industrial Economics, the Board of Investment, the Department of Foreign Trade, the Department of Trade Negotiations and the Thai Industrial Standards Institute, will hold talks before negotiating with Chinese authorities, he said.
Thailand's import duty applied to EVs has a high threshold when there is no FTA in place. For instance, Tesla Inc would have to pay an 80% import duty while Japanese EV automakers are taxed 20%, down from 40%, as a result of the Japan-Thailand Economic Partnership Agreement.
The reason for the zero import duty for Chinese EVs is because FTA negotiations started in 2003, a time when such vehicles were not yet regarded as an investment priority for Thailand, said Mr Kulit.
Thailand has to reclassify EVs and revise the lack of an import duty, as well as institute safety standards for Chinese models, he said.
Meanwhile, the Customs Department is in the process of restructuring the import duty for supercars to create a level playing field for independent car dealers, official car dealers and dealers who have a domestic production base, said Mr Kulit.
The department is hiring Thammasat University to make an assessment to that end, he said.
The department will conduct a hearing next week, with the goal of settling on a tax structure that is reasonable, protects domestic manufacturers and discourages tax evasion, said Mr Kulit.
Revenue collection from the Customs Department for fiscal 2017 ending Sept 30 totalled 104 billion baht, in line with the target, he said.
Separately, the Comptroller-General's Department director-general Suttirat Rattanachot said budget disbursement for fiscal 2017 was lower than expected, especially regarding the 66% disbursement of a 361-billion-baht investment budget, which was below the 87% target or 548 billion.
Disbursed funds totalled 2.73 trillion baht or 94.6% of the fiscal budget, up 0.4% year-on-year but below the 96% disbursement target, she said.