The Excise Department plans to give motorcycle manufacturers a one-year grace period to prepare themselves for the new tax structure, which is based on CO2 emissions, its chief says.
Motorcycle manufacturers requested a two-year grace period after the new levy came into force, but the department believes two years is too long and offered only one year, said director-general Krisada Chinavicharana.
If manufacturers begin adjustments now, they will have two years before the tax is enforced, he said.
The new tax rate means motorcycles sold in Thailand with higher CO2 emissions will be subject to higher tax rates and retail prices. Larger engines typically release more emissions.
Earlier, Mr Krisada said the new excise tax on motorcycles based on CO2 emissions would not cause retail oil prices to rise as the tax will result in a mere 0.05% increase on retail prices. For instance, the CO2 emission tax will add 150-200 baht in costs for a motorcycle valued at 50,000.
He said local motorcycle manufacturers agreed to a carbon-based tax.
The department is working out the structure of the new excise tax on motorcycles and it should be designed to encourage manufacturers to shift production to low-emission vehicles, said Mr Krisada.
A source from the department estimated that 92-93% of the country's total 10 million motorcycles had engines sized under 150 cubic centimetres, which are taxed at 2.5%.
The new structure will require motorcycles with under 150-cc horsepower engines that emit less than 50 grammes of CO2 per kilometre to pay a 3% excise tax, and those that emit lower CO2 volumes will be taxed less.
Starting from January 2016, the Excise Department recalibrated the car tax, which was previously based on engine size, to CO2 emissions.