Top court rules Toyota unit must pay B10bn in import duties

The Supreme Court on Thursday upheld a lower court ruling that the local unit of Toyota Motor Corp owed the government 10 billion baht (US$272.11 million) in extra taxes for importing components not subject to a reduced tariff.

The court was handling an appeal against a 2019 ruling that the company must pay duties on some parts imported from Japan, which were for its Prius gas-electric hybrid model assembled in Thailand between 2010 and 2012.

The court agreed with the previous decision that the imported items should be treated as complete knock-down kits, with an 80% tariff rate, instead of as auto parts, meaning they were not eligible for a reduced rate of 30% under a Japan-Thailand Economic Partnership Agreement (JTEPA).

Toyota's Thailand unit in a written statement said it was paying the lower tax rate for imported Prius parts based on JTEPA, but it respected the ruling and would comply.

The additional tax was owed on more than 20,000 Prius vehicles assembled at Toyota's Gateway factory between 2010 and 2012, according to earlier media reports.

Toyota also produces gasoline-engine and hybrid-engine Camry sedans in Thailand, which were not subject to additional tariffs because the majority of parts are procured locally.

• Toyota Prius tax story

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. From 2010 to 2014, 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.

The authorities also claimed that there was no actual production line for the Prius at the Chachoengsao plant.