More Tax Incentives for Green Investment Planned
In an ambitious push toward a more sustainable future, the Thai government is laying the groundwork for a host of tax incentives designed to foster a low-carbon economy and fuel investment in green initiatives, Finance Minister Pichai Chunhavajira announced during the Bangkok Post Conference 2024 titled “Greening the Future: ESG Leadership in the Sustainability Revolution.”
These proposed incentives are part of a broader initiative to combat climate change and promote sustainable business practices among industries across Thailand. The Finance Ministry is already facilitating carbon credit transactions with exemptions from corporate income tax on the net profits derived from the sale of carbon credits under the Thailand Voluntary Emission Reduction program. Additionally, investments in the Thai ESG (environmental, social, and governance) Fund and the implementation of a lower excise tax on low-emission vehicles are among the current measures undertaken to incentivize environmentally responsible business practices.
Pichai delineated the new tax incentives across three temporal stages, detailing a comprehensive plan that encompasses immediate actions, medium-term strategies, and long-term goals. In the short term, the focus will be on endorsing the adoption of alternative energy sources and enhancing energy efficiency. Tax deductions will be available for the acquisition and installation of solar panels, and expenses incurred in energy efficiency improvements will also be deductible. Moreover, investment in the research and development of climate technology will be encouraged.
The medium-term strategy aims to promote activities that contribute to reduced carbon emissions and the development of an ecosystem supportive of greenhouse gas mitigation. This includes providing tax incentives for businesses to audit their carbon footprints, enabling them to strategize more effectively to lower emissions. Additionally, tax benefits will be offered to private companies that participate in registering carbon credits across various industries, with the goal of enhancing the carbon credit market’s supply and liquidity.
Looking toward the future, the Finance Ministry intends to implement a carbon tax targeting excessive greenhouse gas emissions. This long-term measure is aligned with the objectives of the Paris Agreement, signifying Thailand’s commitment to global efforts in climate change mitigation.
These initiatives, Pichai emphasized, will position Thailand at the forefront of sustainable development, attracting investments and fostering a fair and sustainable economy. Enhancing the quality of life for the Thai population through these means underscores the nation’s dedication to the Environmental, Social, and Governance (ESG) principles of sustainable development.
Despite not being among the major global emitters of carbon dioxide, Thailand has faced significant impacts from climate-related loss events, ranking ninth worldwide in terms of human and economic losses between 2000 and 2019. This vulnerability to climate change drives the urgency behind the government’s incentive-based approach to fostering sustainable development and tackling the associated economic challenges head-on.
Pichai called on the private sector, civil society, and government bodies to place a high priority on ESG factors. This collaborative effort, he argues, is essential not just for the well-being of Thailand, but is a critical component of the global response to environmental conservation and climate change mitigation. With adverse economic impacts from climate change on the horizon, these measures stand as crucial steps toward a secure and sustainable future.
