Thailand Issues Key Top-Up Tax Guidance: Exchange Rates, Exempt Entities, and Special Cases

Thailand enacted the Emergency Decree on Top-Up Tax B.E. 2567 (2024) (the “Emergency Decree“), which applies to large multinational enterprises (MNEs) whose total consolidated revenue, as reported in the consolidated financial statements of the ultimate parent entity (UPE), equals or exceeds EUR 750 million (or the Thai Baht equivalent). This legislation subjects in-scope MNEs to a top-up tax at a 15% global minimum tax rate for accounting periods commencing on or after 1 January B.E. 2568 (2025).

To support the implementation of the Emergency Decree with clarity and ensure practical enforceability, the Director-General of the Revenue Department issued three items of secondary legislation (the “Notifications“). These Notifications were issued on 24 December B.E. 2568 (2025) and published in the Royal Gazette on 13 January B.E. 2569 (2026). The Notifications apply for purposes of determining top-up tax liability for accounting periods commencing on or after 1 January B.E. 2568 (2025).

Key Provisions of the Secondary Legislation

1. Notification of the Director-General of the Revenue Department on Top-Up Tax (No. 6): Exchange Rate Conversion Standards

The top-up tax calculation is based on the financial information of MNE groups, which generally conduct operations using foreign currencies as their principal currencies. Consequently, establishing clear and standardized exchange rate rules is essential for accurate top-up tax computation.

This Notification prescribes exchange rate criteria for converting foreign currency amounts into Thai Baht under the Emergency Decree, ensuring consistency and uniformity in top-up tax calculations. The key provisions include:

Conversion for Tax Calculation Purposes

When the law prescribes criteria or conditions requiring consideration of figures from financial statements or calculation of top-up tax for an entity or group of entities stated in foreign currency, and such amounts must be converted to Thai Baht for a particular accounting period, the conversion shall utilize the average rate between the buying rate and selling rate for the month of December preceding that accounting period, as calculated by the Bank of Thailand.

Payment and Refund of Top-Up Tax

Regardless of which foreign currency is used as the principal currency in the operations of an entity or its group entities, any payment or refund of top-up tax in Thailand shall be made exclusively in Thai Baht. The conversion shall be calculated using the average rate between the buying rate and selling rate of commercial banks, as calculated by the Bank of Thailand on the last business day preceding either the date of tax payment or the date on which the competent authority approves the tax refund, unless otherwise exempted.

2. Notification of the Director-General of the Revenue Department on Top-Up Tax (No. 7): Excluded Entity Characteristics

Pursuant to Section 26 of the Emergency Decree, constituent entities (CEs) located in Thailand that are members of an MNE group whose total consolidated revenue, as reported in the consolidated financial statements of the UPE, equals or exceeds EUR 750 million (or the Thai Baht equivalent) for at least two accounting periods within the four accounting periods prior to the current accounting period, are subject to top-up tax.

However, Section 27 provides that certain categories of CEs are exempt from being treated as CEs subject to top-up tax. These exemptions apply to:

1. Government agencies
2. International organizations
3. Non-profit organizations
4. Pension funds
5. Investment funds that are UPEs
6. Real estate investment vehicles that are UPEs
7. Other entities as may be prescribed by Royal Decree

To prevent overly broad interpretation of these exemptions, this Notification clearly and specifically prescribes the characteristics and qualifications of each entity type that does not constitute a CE, thereby establishing which entities fall outside the scope of top-up tax liability.

3. Notification of the Director-General of the Revenue Department on Top-Up Tax (No. 8): Special Calculation Rules for Entities with Specific Characteristics

This Notification prescribes specific criteria, procedures, and conditions for determining top-up tax liability applicable to CEs with the following characteristics:

1. Constituent entities in which the UPE holds a minority interest
2. Stateless constituent entities
3. Investment entities, including insurance investment entities with liabilities arising from insurance contracts or life insurance annuity contracts

These entities possess legal forms, organizational structures, complex ownership structures, or operational modes that are distinct from other CEs, rendering the general rules under the Emergency Decree inappropriate for direct application. Accordingly, this Notification clearly prescribes specific methodologies and conditions for determining:

• The scope of income
• The aggregation of income
• The allocation of profits or losses
• Calculation methodologies

These provisions ensure that top-up tax collection is conducted accurately and fairly, properly reflecting the effective tax rate (ETR).

Separate Calculation Requirement

The calculation of ETR and top-up tax for CEs with these specific characteristics shall be conducted separately from other CEs within the MNE group. Furthermore, in certain cases, items and amounts included in the computation of ETR and top-up tax for entities with specific characteristics shall not be included in the computation of ETR and top-up tax for other CEs within the MNE group.

Legal Status and Hierarchy

These Notifications are issued pursuant to the authority granted under the Emergency Decree. They establish criteria and procedures for practical enforcement and support the implementation of the Emergency Decree. The Notifications apply consistently with the Emergency Decree, provided they do not conflict with other existing or future secondary legislation, such as Royal Decrees or Ministerial Regulations, which may be issued to prescribe further details in accordance with standards established by the Organization for Economic Co-operation and Development (OECD). Accordingly, stakeholders must continuously monitor further developments.

Key Considerations for Stakeholders

1. Application of Prescribed Exchange Rates

MNEs subject to top-up tax must apply the exchange rates prescribed under the relevant Notification when converting foreign currency amounts into Thai Baht to ensure uniform standards for tax computation. The amount of tax payable may vary based on prescribed exchange rates. However, such enterprises are afforded sufficient time to ascertain applicable criteria in advance of the accounting period commencement.

2. Documentation Requirements for Specific Constituent Entities

Constituent entities in which the UPE holds a minority interest, entities with complex ownership structures, stateless constituent entities, and investment entities whose ETR may not accurately reflect actual tax burdens must prepare comprehensive and detailed supporting documentation. Such information should include, but is not limited to:

• Investment income details
• Ownership and control structures
• Asset management arrangements
• Relevant financial statements

This documentation should support the assessment of whether top-up tax computation should be performed according to general rules or whether the application of specific rules, methodologies, or conditions prescribed by the relevant Notification is required.

Conclusion

The Emergency Decree has been designed to align with the OECD Global Anti-Base Erosion Rules. These Notifications are essential to demonstrate Thailand’s commitment to implementing top-up tax in accordance with OECD-prescribed standards while safeguarding Thailand’s rights and interests in top-up tax collection. Therefore, these Notifications should be considered and applied in conjunction with the Emergency Decree to enable CEs subject to top-up tax to calculate their obligations accurately and minimize interpretative gaps that could otherwise be exploited to avoid top-up tax liability.

Author: Panisa Suwanmatajarn, Managing Partner.

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