Toyota Motor Thailand Co (TMT) will suspend production of the Prius autmobiles at their Chachoengsao factory for about a year or until the Central Tax Court hands down a final verdict on a tax dispute. Thai authorities claim there is no actual production line for the Prius at Toyota's Chachoengsao factory. Thailand is currently Toyota's largest Southeast Asian production base. Toyota began producing the Prius in Thailand in November 2010.
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. 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 a 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.
Toyota filed a lawsuit in June against the Customs Department, while last month it announced it would sue the NACN for damaging its reputation. A Toyota source insists all Prius parts are imported under the Japan-Thailand Economic Partnership Agreement (JTEPA), under which these parts are subject to import duty of zero to 10% compared with zero to 80% for normal imports. Toyota has reaffirmed that it imports Prius parts using the correct declaration approved by the relevant government agencies.