Thailand’s Top-up Tax Regime: Aligning Domestic Law with OECD Global Minimum Tax Standards

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Thailand’s Top-up Tax Regime: Aligning Domestic Law with OECD Global Minimum Tax Standards

Overview of Thailand’s Top-up Tax Regime

Following the enactment of the Emergency Decree on Top-up Tax, B.E. 2567 (2024) (the “Emergency Decree“), Thailand has established a global minimum tax regime aligned with international tax reform initiatives. The Emergency Decree applies to large multinational enterprise groups (MNEs) with consolidated financial statement revenues of at least EUR 750 million (or the Thai Baht equivalent).

Under the Emergency Decree, in-scope MNEs are subject to a 15% global minimum effective tax rate on their profits through the imposition of a top-up tax. This mechanism ensures that profits are taxed at a minimum level, regardless of the jurisdiction in which they are earned. The Emergency Decree took effect for accounting periods commencing on or after 1 January B.E. 2568 (2025), marking a significant development in Thailand’s international tax framework and its alignment with the global minimum tax standards endorsed by the Organisation for Economic Co-operation and Development (OECD).

Draft Secondary Legislation

On 30 December B.E. 2568 (2025), the Cabinet approved in principle four draft items of secondary legislation (the “Draft Secondary Legislation“) issued pursuant to the Emergency Decree. The Draft Secondary Legislation sets out detailed rules governing the determination of multinational enterprise groups subject to the top-up tax and the adjustment of income, expenses, and covered taxes for calculating the top-up tax.

The Draft Secondary Legislation has been developed with reference to the Global Anti-Base Erosion (GloBE) Model Rules, the related Commentary, and the Administrative Guidance issued by the OECD. The four draft items of secondary legislation are as follows:

  1. Draft Royal Decree prescribing the criteria for determining the applicability of the top-up tax to multinational enterprise groups that have undergone organizational restructuring, B.E. ….;
  2. Draft Royal Decree prescribing entities that are not regarded as constituent entities, B.E. ….;
  3. Draft Ministerial Regulation No. .. (B.E. ….), issued pursuant to the Emergency Decree, concerning the allocation of residual top-up tax received by Thailand to constituent entities located in Thailand; and
  4. Draft Ministerial Regulation No. .. (B.E. ….), issued pursuant to the Emergency Decree, concerning adjustments to income, expenses, and covered taxes for calculating the top-up tax.

Applicable Stakeholders to the Emergency Decree and Draft Secondary Legislation

Scope of Application

The Emergency Decree, together with the Draft Secondary Legislation, applies to all constituent entities (CEs) located in Thailand that are members of an MNE group whose ultimate parent entity has consolidated revenues equal to or exceeding EUR 750 million (or the Thai Baht equivalent) in at least two of the four preceding fiscal years.

Organizational Restructuring

MNEs should plan in advance for organizational restructuring activities, including mergers and acquisitions, demergers, and intra-group transfers of assets, as such restructuring arrangements cannot be used to circumvent the top-up tax.

Investment Promotion Incentives

MNEs that have received investment promotion incentives from the Thailand Board of Investment (BOI) are exempt from corporate income tax (CIT); however, such incentives do not exempt them from the top-up tax. Where the effective tax rate falls below 15%, the relevant MNEs are required to pay top-up tax to reach the global minimum effective tax rate.

Tax Planning Requirements

Advance tax planning is essential. Where an MNE has CEs in Thailand, the effective tax rate of each CE should be carefully assessed. Even where the effective tax rate (ETR) exceeds 15% and no top-up tax is payable, GloBE information reporting obligations continue to apply. To ensure compliance with the OECD GloBE Rules, MNEs are advised to consult financial and tax advisors to maintain accurate accounting and tax information.

Reporting and Filing Obligations

All CEs in Thailand are required to electronically submit the following documents to the Thai Revenue Department within 15 months from the end of the relevant accounting period in which the top-up tax is assessed:

  • Notification reporting information relating to the MNE group, details of the constituent entity, and the jurisdiction in which it is located;
  • The GloBE Information Return; and
  • The top-up tax return, together with the payment of the corresponding tax.

Next Steps

The Draft Secondary Legislation issued pursuant to the Emergency Decree is currently undergoing the process for publication in the Royal Gazette. Once officially published, it will become enforceable as secondary legislation, marking the next stage in the implementation of Thailand’s top-up tax regime.

Conclusion

The Emergency Decree and the Draft Secondary Legislation ensure that Thailand’s top-up tax framework is fully aligned with the practices adopted by members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS). This approach is expected to significantly reduce base erosion and profit shifting by MNEs at both domestic and international levels while curbing competitive disparities in corporate income taxation. Moreover, it is anticipated to promote sustainable investment in Thailand, balancing fiscal sustainability with a competitive investment environment.

Related Article: Advancing Thailand’s Legal and Regulatory Reform under the OECD Framework – The Legal Co., Ltd.

Author: Panisa Suwanmatajarn, Managing Partner.

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