Amendments to Thailand’s Act on National Competitive Enhancement: Aligning with OECD’s Global Minimum Tax

Background

The Act on National Competitive Enhancement for Targeted Industries B.E. 2560 (A.D. 2017) (the “Act“) was published in the Royal Gazette and became effective on 14 February 2017. The Act’s primary objective is to promote investment in targeted industries and enhance Thailand’s national competitiveness, with the overarching goal of transitioning the country beyond middle-income status. Under the Act, eligible targeted industries must either be newly introduced to Thailand or utilize new technologies or advanced production processes that contribute to the development and promotion of innovation.

Purpose of the Amendment

The Thai government has recently announced its intention to amend the Act to align the country’s legislative framework with the tax policy principles established by the Organization for Economic Co-operation and Development (OECD). In this regard, a draft Royal Decree has been issued to amend the Act on National Competitive Enhancement for Targeted Industries (No. …), B.E. …. (the “Draft Act“).

The proposed amendments aim to align Thailand’s legal framework with international tax standards in the digital economy, particularly those developed under the OECD’s Base Erosion and Profit Shifting (BEPS) 2.0 Pillar Two initiative—commonly referred to as the Global Minimum Tax (GMT).

Under BEPS 2.0 Pillar Two, multinational enterprise (MNE) groups with consolidated annual revenues of at least EUR 750 million (approximately THB 28 billion) are subject to a minimum effective tax rate (ETR) of 15% on their profits in each jurisdiction. If a subsidiary in any given jurisdiction is subject to an ETR below this threshold, a top-up tax may be levied by the jurisdiction of the ultimate parent entity or another qualifying group entity, pursuant to the OECD’s Model Rules.

In response to these global developments, Thailand is recalibrating its investment incentives regime to ensure continued competitiveness while maintaining compliance with emerging international tax obligations.

Key Proposed Amendments

The key proposed amendments include:

1. Granting of Tax Credit Rights and Benefits – Definitions are introduced for “Tax Credit,” “Remaining Tax Credit,” and “Tax Credit Refund.” The proposed amendments allow promoted entities to utilize tax credits instead of direct tax payments.
2. Refund of Remaining Tax Credits – The Policy Commission may consider granting refunds for unused tax credits to promoted entities, subject to the availability of funds and limited to the remaining tax credit balance.
3. Revocation of Tax Credit Rights and Benefits – If the Policy Commission revokes a promoted entity’s tax credit rights and benefits, the entity will forfeit all entitlement to tax credits for the relevant accounting period. Applicable tax laws will then be enforced accordingly.
4. Inter-Agency Data Coordination – For purposes of investment promotion and evaluation, the Board of Investment (BOI) may request relevant tax collection data from the Ministry of Finance.
5. Transitional Provision – If deemed necessary, the Policy Commission may authorize the retroactive application of tax credit rights and benefits to qualifying investments or expenditures incurred from 1 January 2025.

Current Status

The BOI serves as the principal agency responsible for the proposed legislative amendments, which are currently subject to a public consultation process taking place from 4 July to 18 July 2025.

Given the significant impact of tax credit utilization on government revenue and its relevance to the public interest, it is essential that the granting and use of tax incentives strictly adhere to the policies established by the National Policy Commission. Regulation through a structured permit or licensing system is necessary to maximize national development benefits, particularly in research and development (R&D), innovation, and the development of specialized talent in targeted industries.

Conclusion

Thailand’s adoption of the OECD’s GMT framework through the proposed legislative amendments underscores the country’s commitment to international tax cooperation while preserving its appeal as an investment destination. The introduction of the Qualified Refundable Tax Credit (QRTC) mechanism represents a strategic effort to foster innovation-led growth and align tax incentives with national economic and industrial priorities.

These reforms reflect Thailand’s broader objective of establishing itself as a regional hub for high-value, innovation-driven industries and as a responsible leader in economic development. The Draft Act is currently subject to a public hearing process, the outcome of which will be instrumental in determining the final shape of the legislation. As Thailand progresses toward implementation, sustained policy oversight and active engagement with stakeholders will be critical to ensuring the success and effectiveness of this landmark tax reform.

Author: Panisa Suwanmatajarn, Managing Partner.

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