Toyota Prius line to suspend production
Tax tussle with authorities to blame
Toyota Motor Thailand Co (TMT) will suspend the Prius production line at its Chachoengsao factory for about a year or until the Central Tax Court hands down a final verdict on a tax dispute, according to a source.
Thai authorities allege Toyota understated taxes by claiming 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.
More importantly, the authorities claim there is no actual production line for the Prius at the Chachoengsao factory.
The investigation came after the Nation Associate Anti-Corruption Network (NACN) early this year asked the Finance Ministry to investigate whether the hybrid is a CKD vehicle — totally assembled in Thailand — or an imported car, as the latter is subject to 187.75% tax.
The authorities then ordered Toyota to pay 11 billion baht in additional tariffs and taxes, applying a higher rate equal to that imposed on finished vehicles.
TMT filed a lawsuit in June against the Customs Department, while last month it announced it would sue the NACN for damaging its reputation.
The TMT source insists all Prius parts are imported under the Japan-Thailand Economic Partnership Agreement, under which these parts are subject to import duty of zero to 10% compared with zero to 80% for normal imports.
“TMT reaffirms the company imports Prius parts using the correct declaration approved by the relevant government agencies.”
Thailand is Japan-based Toyota Corporation’s largest Southeast Asian production base, manufacturing pickup trucks and other vehicles under its TMT subsidiary.
After starting production in Japan and China, Toyota began producing the Prius in Thailand in November 2010.
As of last year, 18,000 Priuses had been sold in Thailand.
Slow economic prospects and myriad risks have prompted TMT to cut its domestic sales target to 280,000 vehicles this year from an earlier projection of 330,000, marking a third consecutive year of decline.
TMT last month reported its first-half sales fell by 24.9% to 123,125 vehicles for a market share of 33.4%, down from 37.1%.
Sales of Toyota passenger cars totalled 53,285 vehicles, down by 30.3% year-onyear, while sales of its commercial vehicles reached 69,840, down by 20.2%.
President Kyoichi Tanada last month said TMT faced a spate of negative factors that had engulfed the country’s automobile market, particularly weak consumption and high household debt. The private sector has also become wary of spending and new investment.