Carbon pricing in excise tax rates
On 21 January 2025, the Cabinet approved the principles of a draft Ministerial Regulation to be issued by the Ministry of Finance regarding the implementation of a carbon tax as part of 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 decarbonisation of the economy, minimise the carbon footprint, and encourage sustainable practices among both consumers and businesses without the government losing overall revenue.
The key provisions of the draft Ministerial Regulation are outlined below:
- Products subject to Carbon Pricing Mechanism
These include gasoline, similar oils, various types of gasohol, kerosene, lighting oils, jet fuel, diesel, and other similar oils, biodiesel, LPG, propane, and similar gases, as well as fuel oil. - Initial carbon price
The initial carbon price for oil and petroleum products is set at THB 200 per ton of CO2 equivalent, based on the greenhouse gas emissions of each type of oil and petroleum product as listed in the excise tax rate schedule.
Any carbon price exceeding THB 200 per ton must be approved by the Cabinet through the normal process of changing the excise tax rate. - Carbon tax embedded in excise tax rates for oil and petroleum products
While existing excise tax rates remain unchanged, a carbon cost is embedded within the excise tax to reflect the greenhouse gas emission factors of the respective oil and petroleum products, as outlined below:
| Product | Excise tax rate (inclusive of Carbon Pricing Mechanism) |
| Gasohol E20 | THB 5.200 per litre (inclusive of carbon tax of THB 0.358 per litre) |
| Kerosene | THB 4.726 per litre (inclusive of carbon tax of THB 0.498 per litre) |
| Jet fuel | THB 4.726 per litre (inclusive of carbon tax of THB 0.498 per litre) |
| Diesel | THB 6.440 per litre (inclusive of carbon tax of THB 0.548 per litre) |
| LPG | THB 2.170 per litre (inclusive of carbon tax of THB 0.623 per litre) |
| Furnace oil | THB 0.640 per litre (inclusive of carbon tax of THB 0.618 per litre) |
The Council of State is currently reviewing the approved draft Ministerial Regulation. The Minister of Finance must issue the Ministerial Regulation for publication in the Royal Gazette for it to become law.
Our observation:
Thailand’s carbon tax reform represents a balanced approach to environmental sustainability and economic stability. By embedding the tax within the existing excise structure, the government aims to drive industrial innovation and align with global trade practices, all while maintaining fiscal health and consumer price stability.
Reference (in Thai):
- Summary of the Cabinet Meeting held on 21 January 2025. Retrieved from Royal Thai Government.
Want to know more?
Pongphan Narasin Director - Taxation Practice - Bangkok
Naritsaporn Tanapoonsin Director - Taxation Practice - Bangkok
Parin Supsavaipol Tax Director - Taxation Practice - Bangkok
