Explore 2026 hybrid vehicle tax breaks in Vietnam, Thailand and Indonesia, rates, eligibility and market impact. Find out which market offers the best incentives today!
Hybrid vehicles are gaining traction across Southeast Asia, but the tax landscape varies dramatically from one country to the next. In 2026 Vietnam will introduce a special consumption tax (SCT) for hybrid electric vehicles (HEV), while Thailand and Indonesia already offer more generous reliefs through their own excise and luxury sales taxes. Below is a clear, side‑by‑side look at the rates, eligibility rules and market implications for the three key markets.
Quick Tax Rate Comparison (2026)
| Country | Base SCT / Excise Rate for Conventional ICE | Hybrid Tax Relief (as % of ICE rate) | Effective Hybrid Rate |
|---|---|---|---|
| Vietnam | 35–150% | 70% of ICE rate (i.e., 24.5–105%) | 24.5–105% |
| Thailand | 14–34% (adjusted by CO₂ emissions) | 5—10% of ICE rate (roughly 30–50% of ICE) | ~30–50% |
| Indonesia | 10–40% for engines <3 L | Up to 10% of ICE rate (still below ICE level) | Under 10% of ICE |
The numbers show that Thailand and Indonesia currently provide a deeper fiscal advantage for hybrids than Vietnam will in its first year of implementation.
Vietnam: New SCT Rules for Hybrids
Vietnam’s decree 360/2025 sets the hybrid tax relief at 70 % of the standard special consumption tax applied to comparable internal‑combustion‑engine (ICE) cars. To qualify, a vehicle must use no more than 70 % of the fuel energy that a same‑size gasoline car would consume. The government calculates this via the R‑ratio – the fuel consumption of the HEV divided by the average fuel consumption of a conventional ICE vehicle with the same displacement. If R ≤ 0.70, the reduced SCT applies.
- Eligibility is assessed annually; baseline ICE fuel‑consumption figures are published by the Ministry of Construction before 31 March each year.
- Only domestically assembled or fully imported hybrids are considered; the tax base is the ex‑factory/export price.
Thailand: Excise Tax Incentives
Thailand’s Excise Tax system offers tiered reductions based on CO₂ emissions (g/km) and vehicle type:
- MHEV – 10 % rate if emissions ≤ 100 g/km (≈ 4.3 L/100 km); 12 % if 101‑120 g/km.
- HEV – 6 % rate if emissions ≤ 100 g/km; 9 % if 101‑120 g/km.
- PHEV – 5 % rate for electric‑only range ≥ 80 km; 10 % for range < 80 km.
Additional conditions include:
- Domestic parts content of 17‑45 % depending on the model.
- A minimum investment of US$84 million in hybrid production from 2024‑2027.
Indonesia: Luxury Sales Tax (PPnBM) Relief
Indonesia classifies hybrids under its Luxury Sales Tax (PPnBM) regime, but only for vehicles produced locally and certified under the Low‑Carbon Emission Vehicle (LCEV) program.
- Gas‑powered hybrids must achieve ≤ 6.45 L/100 km; diesel hybrids ≤ 5.71 L/100 km.
- Minimum local content requirement: 40 %.
- PPnBM rates for ICE cars range 10‑40 % (engine < 3 L) and 40‑125 % (engine ≥ 3 L). Hybrids receive a reduced rate that stays under 10 % of the comparable ICE tax.
What the Differences Mean for Buyers and Manufacturers
While Thailand and Indonesia presently provide larger percentage cuts, both nations tie the benefits to strict emission thresholds, local‑content mandates, and, in Indonesia’s case, mandatory domestic assembly. Vietnam’s approach is more straightforward—apply a 30 % discount to the ICE tax—but it requires a clear demonstration that the hybrid’s fuel use is at least 30 % lower than a conventional model.
For multinational automakers, the takeaway is clear:
- Invest in local supply chains to meet parts‑localisation rules.
- Design hybrids that stay under the specified CO₂ or fuel‑consumption limits to unlock the deepest tax breaks.
- Monitor policy updates; all three governments have signaled they will tweak incentives as market adoption evolves.
Consumers, meanwhile, can expect lower on‑road prices in Thailand and Indonesia once the tax reliefs are applied, while Vietnam’s inaugural hybrid tax regime will make the new vehicles slightly more expensive than in its neighbours until further incentives are introduced.
Bottom Line
In 2026, Thailand and Indonesia lead the region in hybrid tax generosity, but each market attaches strict environmental and localisation criteria. Vietnam’s upcoming SCT cut is modest but could become more competitive if the government expands the definition of eligible hybrids or raises the local‑content threshold. For anyone watching the Southeast Asian auto market, these tax nuances will shape where manufacturers set up production and which models hit the showroom floor.