Toyota Motor Thailand has voiced reluctance to resume production and distribution of its popular Prius hybrid at the Gateway plant in Chachoengsao province, citing legal snags related to a tax issue.
The Prius is the world's first petrol hybrid vehicle, and Toyota chose the Gateway plant in Thailand as the third country to assemble the model in November 2010 after starting production in Japan and China.
But in August 2015, Toyota suspended Prius production at the Gateway plant; the model has been unavailable in the local market since then. During 2010-14, 18,000 Priuses were sold in Thailand.
Thai authorities alleged that Toyota understated taxes by claiming that the hybrid car is a completely knocked-down (CKD) vehicle, despite the fact that the company imports most of the main finished parts from Japan for local assembly.
More importantly, the authorities claimed that there was no actual production line for the Prius at the Chachoengsao plant.
The investigation came after the Nation Associate Anti-Corruption Network (NACN) in early 2015 asked the Finance Ministry to investigate whether the hybrid car is a CKD vehicle -- totally assembled in Thailand -- or an imported car, as the latter is subject to a 187.75% tax.
The authorities then ordered Toyota to pay 11.64 billion baht in additional tariffs and taxes, equal to that imposed on finished vehicles.
Toyota filed a lawsuit in June 2015 against the Customs Department, while in July it announced it would sue the NACN for damaging its reputation.
Chatchai Taveesakulvadchara, Toyota Thailand's executive vice-president, said: "To assemble the Prius hybrid in Thailand, Toyota has followed the country's legal protocol, so this tax assessment from the Customs Department was unlawful."
Earlier, Toyota insisted that all Prius parts are imported under the Japan-Thailand Economic Partnership Agreement, under which the parts are subject to import duties of 0-10% compared with 0-80% for normal car imports.
"However, the department and prosecutors filed a case with the Court of Appeal in June and Toyota is preparing to submit a cross appeal," Mr Chatchai said.
Moreover, the Prius hybrid was assembled before Toyota applied for the Board of Investment's scheme for hybrid electric cars last year with an investment of 19 billion baht at the Gateway plant. Under these privileges, the CH-R and Camry hybrid cars are being produced locally.
Mr Chatchai said the Prius's legal standing has yet to be clarified and import practices with Thai authorities should be more certain. For this reason, Toyota will continue the suspension of Prius production in Thailand.
"It is too early to say that there is no chance for the Prius in Thailand, but Toyota just wants this case to be settled before committing to a business direction," Mr Chatchai said. "But the Prius case has no impact on Toyota's manufacturing of existing hybrid cars in Thailand."