Source: taxnews.ey.com | 07 February 2025
- The final draft of proposed regulations to implement a carbon tax in Thailand has been approved by the Cabinet and is moving toward enactment.
- This Alert highlights key provisions in the regulations.
On 21 January 2025, the Thai Cabinet approved a draft Ministerial Regulation proposed by the Ministry of Finance (MoF) that serves to implement a carbon tax as part of its efforts to reduce greenhouse-gas emissions and promote environmental sustainability.
Under the approved draft Ministerial Regulation, the carbon tax will be embedded within the current excise tax structure on oil and petroleum products without affecting consumers, as the existing excise tax rates will remain unchanged. This regulation is intended to support the decarbonization of the economy, minimize the carbon footprint and encourage sustainable practices among both consumers and businesses without losing overall Government revenue prior to the eventual implementation of the Climate Change Act.
A few key provisions in the pending regulations are outlined below.
Products subject to the Carbon Pricing Mechanism
Products affected by the proposed carbon tax include:
| Excise tariff | Product |
| 01.01 | Gasoline and similar oil, including gasohol (e.g., E10, E20 and E85) |
| 01.03 | Kerosene and oil that can be lighted in a similar manner |
| 01.04 | Jet fuel |
| 01.05 | Diesel and similar oil, including diesel fuel mixed with different types of biodiesels (e.g., B5 diesel, B7 diesel, and B10 diesel) |
| 01.07 | Liquid Petroleum Gas (LPG), liquid propane gas and similar gas |
| 01.12 | Furnace oil and similar oil |
Carbon Price
The carbon price is set at 200 Thai Baht (THB200) per metric ton of carbon dioxide (CO2) equivalent, calculated based on the Greenhouse Gas Emission Factor for each oil and petroleum product as specified in the excise tax tariff.
Any adjustment to the carbon price exceeding THB200 per metric ton of CO2 equivalent shall be subject to Thai Cabinet’s approval, in accordance with excise tax rate change process.
For carbon price adjustments, the MoF will collaborate with other relevant agencies including the Ministry of Energy, the Ministry of Natural Resources and Environment and the Ministry of Industry to ensure consistent alignment with Thailand’s carbon pricing objectives and facilitate reaching a consensus.
Carbon tax embedded in excise tax rates for oil and petroleum products
While the existing excise tax rates will remain unchanged, a carbon cost component is embedded within the excise tax rate to reflect the respective Greenhouse Gas Emission factor of the oil and petroleum products, as outlined below.
| Product | Excise tax rate (inclusive of Carbon Pricing Mechanism) |
| Gasohol E20 | THB5.200/liter (inclusive of carbon tax of THB0.358 /liter) |
| Kerosene | THB4.726/liter (inclusive of carbon tax of THB0.498 /liter) |
| Jet fuel | THB4.726/liter (inclusive of carbon tax of THB0.498 /liter) |
| Diesel | THB6.440/liter (inclusive of carbon tax of THB0.548 /liter) |
| LPG | THB2.170/liter (inclusive of carbon tax of THB0.623 /liter) |
| Furnace oil | THB 0.640/liter (inclusive of carbon tax of THB0.618 /liter) |
The Council of State is currently reviewing the approved draft Ministerial Regulations. The Minister of Finance must issue the Regulations for publication in the Royal Gazette for them to become law (expected within February 2025).
Contact Information
For additional information concerning this Alert, please contact: EY Corporate Services Limited, Tax Services, Thailand
Source: https://taxnews.ey.com/
