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Advancing the ASEAN Power Grid through LTMS-PIP Phase 2

The regional energy landscape has achieved a significant milestone with the execution of the Energy Wheeling Agreement (EWA) under Phase 2 of the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP Phase 2). This agreement involves the Electricity Generating Authority of Thailand (EGAT), Électricité du Laos (EDL), and Tenaga Nasional Berhad (TNB) of Malaysia, representing a sophisticated evolution in multilateral cross-border electricity trade within Southeast Asia.

The EWA represents a substantial advancement from the project’s inaugural phase, doubling the capacity for multilateral cross-border electricity commerce from 100 megawatts (MW) to 200 MW over a two-year period. This enhanced mechanism facilitates the transmission of electricity generated in Laos and Malaysia to Singapore, utilizing the existing grid infrastructure of Thailand and Malaysia as transmission corridors.

Transmission Framework

The Transmission Framework establishes the structural and operational parameters for cross-border power flows under LTMS-PIP Phase 2. It delineates institutional roles, capacity allocations, and operational protocols that enable coordinated electricity transfers across multiple jurisdictions.

Under LTMS-PIP Phase 2, the transmission framework operates through a multidirectional power trade arrangement:

  • Lao PDR Supply Stream: Up to 100 MW of renewable hydropower from Laos, transmitted through Thailand and Malaysia to Singapore
  • Malaysia Supply Stream: Up to 100 MW of electricity from Malaysia directly to Singapore

This integrated framework enables a total seamless transfer capacity of 200 MW, representing a robust commitment to regional energy integration and demonstrating the technical feasibility of multilateral power trade in ASEAN.

Strategic National Contributions

The success of LTMS-PIP transcends technical achievement, serving as a strategic blueprint for the ASEAN Power Grid (APG). Each participating nation fulfills a critical role in this collaborative energy framework:

Thailand (EGAT)

Serving as the primary wheeling partner, EGAT manages the transmission of power across Thai territory. This role positions Thailand’s transmission infrastructure as a cornerstone of the APG, facilitating regional grid integration and strengthening overall energy stability. Thailand’s participation generates revenue through wheeling charges while enhancing national energy security.

Laos (EDL)

As the renewable energy supplier, EDL reinforces its commitment to the APG by providing clean hydropower resources. LTMS-PIP Phase 2 expands Laos’ participation in the regional electricity market, promoting sustainable development objectives and positioning the nation as a key renewable energy exporter within ASEAN.

Malaysia (TNB)

As both a wheeling partner and electricity supplier, TNB plays a dual role in facilitating the framework while actively participating in regional power trade. TNB’s involvement supports Malaysia’s Ministry of Energy Transition and Water Transformation in building a resilient, interconnected ASEAN energy infrastructure, while generating export revenue and strengthening regional energy cooperation.

Conclusion

The successful integration of cross-border electricity trade among Thailand, Laos, and Malaysia under LTMS-PIP Phase 2 establishes a functional model for multilateral energy cooperation within ASEAN. By harmonizing technical standards and optimizing grid utilization through the EWA, the participating nations have progressed from bilateral trade arrangements to a sophisticated regional exchange mechanism.

This partnership not only maximizes existing infrastructure efficiency but also serves as the primary pathfinder project for the broader APG initiative. LTMS-PIP Phase 2 demonstrates that coordinated technical frameworks and sustained political commitment can successfully address the energy needs of multiple nations while advancing toward a sustainable, low-carbon future. The project’s achievements provide valuable insights and operational precedents for future multilateral power integration initiatives across the ASEAN region.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand’s Proposed VAT Increase: Legal and Policy Overview

Thailand is currently undertaking a comprehensive review of its long-term fiscal policy in response to rising public expenditure, persistent budget deficits, and the imperative to secure sustainable government revenue. For fiscal year B.E. 2569 (2026), the Ministry of Finance is preparing a broader tax structure reform plan to be submitted to the incoming government. A key element under consideration is a potential adjustment to the Value Added Tax (VAT) rate.

Background of Thailand’s VAT System

Thailand’s current VAT framework originated as an economic relief measure. In B.E. 2542 (1999), the government issued the Royal Decree Issued under the Revenue Code on the Reduction of the Value Added Tax Rate (No. 353) B.E. 2542 (1999), reducing the VAT rate from the statutory rate of 10% to 7% (comprising 6.3% VAT and 0.7% local tax). This measure was introduced during the Asian financial crisis, commonly referred to in Thailand as the “Tom Yum Kung” crisis.

Although originally intended as a temporary measure, the reduced VAT rate of 7% has been continuously extended through successive Royal Decrees for more than two decades and has remained a core feature of Thailand’s VAT system.

In recent years, the Ministry of Finance has expressed concern that the continued application of the reduced VAT rate may prove inadequate to meet Thailand’s future fiscal obligations, including expenditures related to infrastructure development, social welfare programs, and public debt servicing. Additionally, Thailand’s VAT rate remains comparatively low relative to those of many other jurisdictions.

The Ministry of Finance’s Proposed VAT Plan

Based on current policy discussions, the Ministry of Finance is considering a phased adjustment of the VAT rate rather than an immediate increase. The indicative timeline under consideration includes:

  • An increase in the VAT rate from 7% to 8.5% by 2028; and
  • A further increase to 10% by 2030.

Support Measures for Vulnerable Groups

To mitigate the potential social impact of a VAT increase, the Ministry of Finance has indicated that a portion of the additional revenue would be allocated to support vulnerable groups and alleviate cost-of-living pressures. By way of illustration, if VAT revenue were to increase by THB 100 billion, approximately THB 20 billion could be allocated to supplementary benefits under the State Welfare Card scheme, with the remaining amount applied to other cost-of-living support measures. These initiatives are intended to cushion the impact on low-income households in the event that a VAT adjustment is implemented.

Impacted Stakeholders and Economic Sectors

Any adjustment to Thailand’s VAT rate would have wide-ranging implications across multiple stakeholder groups and economic sectors.

Consumers – VAT is a consumption tax that is generally passed on to end consumers through higher prices for goods and services. Households, particularly low-income and fixed-income groups, are likely to experience the immediate impact through increased living costs. While certain essential goods and services may be zero-rated or exempt, they could still be indirectly affected through higher input costs.

Businesses and Operators – VAT-registered businesses would face higher output VAT obligations, which may affect pricing strategies, cash flow management, and compliance costs. Small and medium-sized enterprises (SMEs), in particular, may experience greater pressure if competitive constraints prevent them from fully passing on increased VAT to customers. Certain sectors, such as retail, hospitality, logistics, and consumer services, are expected to be more sensitive to VAT changes due to price elasticity and consumer behavior.

Government and Public Finance – For the government, a VAT increase would strengthen revenue collection and reduce reliance on borrowing. According to policy discussions led by the Ministry of Finance, any adjustment would be accompanied by targeted support measures for vulnerable groups to mitigate social impacts and maintain economic stability.

Current Status

At present, no legislative amendment or binding decision has been enacted. The VAT rate remains at 7% under the Royal Decree Issued under the Revenue Code on the Reduction of the Value Added Tax Rate (No. 799) B.E. 2568 (2025), which extends the reduced VAT rate until 30 September B.E. 2569 (2026). Any adjustment to the VAT rate will be conditional upon prevailing economic conditions. Accordingly, all impacted stakeholders and economic sectors should closely monitor ongoing developments to ensure timely awareness and compliance with any changes.

Conclusion

Thailand’s potential VAT reform reflects broader efforts to strengthen fiscal sustainability and secure long-term public revenue. While the reduced VAT rate remains in force and no legislative amendment has yet been enacted, policy discussions indicate a possible phased increase over the medium to long term. Any adjustment will depend on economic conditions and is likely to be implemented alongside mitigating measures to address social and economic impacts. In this context, businesses, taxpayers, and other affected sectors should closely monitor regulatory developments and assess potential implications for pricing, compliance obligations, and overall cost structures should the proposed reform proceed.

Author: Panisa Suwanmatajarn, Managing Partner.

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BOI Unveils Draft National Semiconductor Roadmap Aiming to Attract Over 2.5 Trillion Baht in Investments

The Board of Investment (BOI) has presented the draft National Strategy for the Development of the Semiconductor and Advanced Electronics Industry to the National Semiconductor and Advanced Electronics Policy Committee. This comprehensive roadmap, prepared since April 2025 with the assistance of a leading global consulting firm, outlines a long-term vision to position Thailand as a leading hub for semiconductor production in the region.

The strategy builds upon Thailand’s existing strengths in downstream activities, such as outsourced semiconductor assembly and testing (OSAT) and integrated circuit design, while advancing capabilities across the full value chain—from upstream wafer fabrication to high-value design and production. The ultimate objective is to achieve “Made-in-Thailand Chips” by 2050, fostering a complete and integrated semiconductor ecosystem.

Strategic Focus and Targets:

The roadmap targets investments exceeding 2.5 trillion baht over the 25-year period from 2026 to 2050. It also aims to develop more than 230,000 highly skilled personnel to support industry growth.

Emphasis is placed on five product categories where Thailand demonstrates strong potential and alignment with domestic industries:

•  Power chips

•  Sensor chips

•  Photonics chips

•  Analog chips

•  Discrete chips

These segments are closely linked to key sectors including automotive, electronics, telecommunications, data centers, artificial intelligence, automation, and medical applications.

Phased Development Approach:

In the initial five-year phase (2026–2030), efforts will concentrate on leveraging current advantages in OSAT, IC design, and advanced electronics, while initiating investments in wafer fabrication and nurturing domestic enterprises to emerge as leading players. Subsequent phases will progressively expand the value chain toward full self-reliance in high-value production.

Five Key Driving Mechanisms:

To realize these ambitions, the strategy proposes action across five critical areas:

1.  Investment Incentives — Provision of financial support, including grants and long-term low-interest loans, to attract priority projects.

2.  Human Capital Development — Establishment of specialized curricula, industry-academia collaborations (both domestic and international), and vocational training programs to build expertise in semiconductor engineering and advanced research.

3.  Technology Advancement — Upgrading national research centers and fostering partnerships among government, private sector, and academic institutions for research and development.

4.  Infrastructure Enhancement — Development of dedicated clusters, reliable utilities (including clean energy), water systems, and robust disaster management capabilities.

5.  Business Environment Improvement — Streamlining approvals and permits, negotiating international trade agreements, and implementing government procurement mechanisms to support local enterprises.

Competitive Positioning and Supporting Context:

Although, Thailand’s semiconductor industry remains in its early stages compared to regional leaders such as Singapore and Malaysia, or competitors including Vietnam and the Philippines, the country possesses competitive advantages in infrastructure, workforce quality, business environment, and downstream industries.

From 2018 to November 2025, the electrical and electronics sector attracted 1,748 investment promotion applications totaling 1.17 trillion baht, representing 19% of all promoted investments and underscoring its status as the leading sector. The global semiconductor market is projected to reach 1 trillion U.S. dollars by 2030, presenting significant opportunities for strategic growth.

Key Takeaways:

•  Thailand’s national semiconductor roadmap targets over 2.5 trillion baht in investments and the development of more than 230,000 skilled professionals by 2050.

•  Focus is directed toward five high-potential chip categories that align with the country’s established industrial strengths.

•  A five-pillar approach addresses incentives, talent, technology, infrastructure, and business facilitation to build a complete ecosystem.

•  The strategy emphasizes transitioning from assembly-focused activities to high-value design and fabrication, aiming for “Made-in-Thailand Chips” and regional leadership in the sector.

•  This initiative positions the semiconductor industry as a key driver of long-term economic competitiveness amid rapid global technological and supply chain evolution.

Author: Panisa Suwanmatajarn, Managing Partner.

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Online Platform: ETDA’s Push for New Rules on Social Commerce to Safeguard Thai Consumers

In a move to tighten oversight on digital marketplaces, Thailand’s Electronic Transactions Development Agency (ETDA) is gearing up to introduce new regulations targeting social commerce platforms. This initiative aims to close loopholes in consumer protection, ensuring that online transactions meet stringent standards amid the growing popularity of buying and selling via social media. The announcement comes as platforms like Facebook argue they fall outside traditional e-commerce definitions, prompting ETDA to expand its regulatory net.

The backdrop for these changes is rooted in Thailand’s evolving digital economy. With e-commerce booming, the existing Electronic Transactions Committee’s announcement—set to take effect on December 31, 2025—already mandates that e-commerce platforms sell or advertise products adhering to standards from the Thai Industrial Standards Institute (TISI) and the Food and Drug Administration (FDA). However, social media giants such as Facebook have claimed exemption, citing the absence of integrated payment systems and separate user accounts for transactions. ETDA has countered this, stating, “Facebook has informed ETDA that they do not fall under the category. We are therefore preparing a new announcement to cover Facebook, as it cannot be denied that Facebook is widely used as a platform for buying and selling goods known as social commerce, which requires strict product standards.”

This conciliatory approach by ETDA also considers international trade dynamics, particularly U.S. policies under President Donald Trump, which threaten trade retaliation against countries restricting American platforms. By avoiding overly restrictive measures, Thailand seeks to balance consumer safety with open trade, preventing potential barriers for U.S.-based companies operating in the region.

Beyond social commerce, the new rules will extend to space-sharing platforms like Airbnb. ETDA plans to enforce standards for user safety, identity verification, and tenant rights, addressing common issues such as leaks or power outages. Additionally, concerns over monopolistic practices in delivery services—previously requiring platforms to offer at least three shipping options—have been shifted to the Trade Competition Commission (TCC) for handling and streamlining regulatory responsibilities.

These developments underscore Thailand’s commitment to fostering a secure digital ecosystem. As social commerce continues to thrive, with platforms blending social interaction and shopping, the need for robust oversight has become evident. ETDA’s efforts aim not only to protect consumers from substandard or unsafe products but also to promote fair competition and innovation in the online space.

Key Takeaways:

Future Implications: This could set a precedent for more comprehensive digital platform governance in Thailand, boosting trust in online transactions.

Expanded Regulation: ETDA’s new announcement will include social commerce platforms like Facebook, requiring them to enforce product standards from TISI and the FDA to plug consumer protection gaps.

Consumer Focus: The rules prioritize Thai buyers’ safety by mandating quality controls on goods sold online, effective from late 2025 onward.

International Considerations: A balanced approach avoids trade conflicts with the U.S., aligning with global digital trade norms.

Broader Scope: Space-sharing services like Airbnb will face new safety and rights standards, while delivery monopolies fall under TCC jurisdiction.

Author: Panisa Suwanmatajarn, Managing Partner.

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Updated Regulation on Official Secrets: Modernization, Electronic Security Measures, and Comparison with International Standards

On 30 December 2025, the Thai Cabinet approved in principle the draft Regulation on the Protection of Official Secrets (No. ..) B.E. …., as proposed by the Office of the Permanent Secretary to the Prime Minister. This revision updates the framework established in B.E. 2544 (2001), primarily to address the increasing reliance on electronic systems in government operations and resolve limitations in handling classified information digitally.

Background and Rationale:

The original regulation, enacted pursuant to Section 16 of the Official Information Act, B.E. 2540 (1997), mandated measures to prevent leakage of official secrets. It detailed procedures for classification, copying, translation, transfer, transmission, disclosure, destruction, storage, backup, and security, but focused predominantly on paper-based documents.

With the widespread adoption of electronic systems, agencies faced operational delays when handling classified information, often reverting to paper methods for compliance. This practice conflicted with the Prime Minister’s Office Regulation on Administrative Correspondence (No. 4), B.E. 2564 (2021), which promotes electronic administration.

The need for reform was identified as early as the Official Information Board No. 2/2554 meeting in March 2011, leading to the formation of a sub-committee. The revised draft, endorsed by the Board in its no. 2/2568 meeting on 28 October 2025, was subsequently submitted to the Cabinet.

Key Amendments: Electronic Classified Information

The primary enhancement is the introduction of Chapter 5: Electronic Classified Information, comprising 26 new provisions (Sections 50/1 to 50/26). These establish comprehensive guidelines for digital management of classified data, covering:

•  Classification and marking of electronic documents.

•  Procedures for creation, copying, translation, transfer, transmission, receipt, and disclosure via digital channels.

•  Secure storage, backup, and recovery to mitigate loss or unauthorised destruction.

•  Cybersecurity measures, including encryption, access controls, and system auditing.

•  Protocols for secure destruction of electronic classified information when no longer needed.

These provisions aim to facilitate efficient inter-agency coordination and public service delivery while preserving confidentiality.

Expected Benefits:

By providing clear protocols for electronic transmission, the regulation enhances administrative speed and aligns secrecy practices with modern information technology. It supports digital transformation in public administration without compromising national security or obligations under the Official Information Act, B.E. 2540 (1997).

Next Steps:

The Cabinet has directed submission of the draft to the Committee for the Scrutiny of Draft Legislation and Subordinate Legislation Proposed to the Cabinet. This review will incorporate observations from entities such as the Office of the Public Sector Development Commission, the Office of the Council of State, the Digital Government Development Agency, the National Economic and Social Development Council, and the National Security Council. Formal promulgation will follow upon completion.

Comparison with International Standards:

Thailand’s revisions demonstrate strong alignment with global best practices in electronic handling of classified information, which universally emphasize encryption, access controls, auditing, and secure storage.

•  United States: Executive Order 13526 and NIST SP 800-53 Revision 5 offer detailed, risk-based controls across multiple families (e.g., Access Control, System and Communications Protection). Thailand’s provisions mirror these in core areas but are less granular.

•  European Union: Council Decision 2013/488/EU requires approved cryptography for higher classifications and comprehensive information assurance. Thailand parallels this in transmission and storage requirements.

•  United Kingdom: The Official Secrets Act 1989 (as amended) and related policies incorporate encryption and secure systems, with recent enhancements under the National Security Act 2023 addressing contemporary threats.

•  ISO/IEC 27001: This standard mandates risk-based information classification and controls for transfer and protection. Thailand’s government-specific rules complement this approach.

Similarities include mandates for encrypted transmission, restricted access, secure storage, and audited destruction. Differences lie in depth: international frameworks like NIST provide extensive, customizable controls and certification requirements, whereas Thailand’s update remains procedurally focused on administrative adaptation.

Overall, this reform represents a commendable advancement toward international convergence, bolstering Thailand’s digital governance while upholding robust confidentiality safeguards. Further enhancements could involve adopting more detailed risk-based mechanisms and independent certification processes observed in mature systems.

Author: Panisa Suwanmatajarn, Managing Partner.

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Bank of Thailand Proposes Stricter Documentation Requirements for Inbound Foreign Exchange Transactions

In addition to the proposed increase in the foreign income repatriation threshold under the Bank of Thailand’s relaxations to foreign exchange regulations (as outlined in our previous article, Proposed Relaxations to Foreign Exchange Regulations), the Bank of Thailand (“BOT”) has proposed measures to strengthen regulatory oversight of inbound foreign exchange transactions. These measures aim to mitigate appreciation pressure on the Thai Baht, enhance transaction transparency, and prevent the inflow of funds inconsistent with their declared sources or otherwise undesirable.

The BOT has launched a public consultation on the Draft Notification on Rules and Procedures for Foreign Exchange Transactions (Draft Rules on Verification of Inbound Foreign Exchange Transactions). The consultation period runs from 30 December 2025 to 16 January 2026, with feedback informing the final regulatory framework.

Current Regulatory Framework

Under existing rules:

  • Foreign currency may be brought into Thailand without amount limitation for conversion into Thai Baht or deposit into a foreign currency deposit (“FCD”) account.
  • Transaction participants are required only to declare the source of funds.
  • No supporting documentary evidence is currently required.

Rationale for the Draft Rules

The proposed amendments are intended to:

  • Enhance scrutiny of inbound foreign exchange transactions and align inbound controls with outbound foreign exchange rules, under which purchases or transfers of foreign currency of USD 200,000 or more (or equivalent) are subject to documentary verification unless Know Your Business (“KYB”) procedures have been applied.
  • Increase transparency in foreign exchange transactions.
  • Prevent misrepresentation of fund sources and the use of inbound transactions for non-genuine or undesirable purposes.
  • Mitigate appreciation pressure on the Thai Baht by moderating demand arising from inbound foreign exchange transactions through enhanced verification and documentation requirements.

Key Features of the Draft Rules

While inbound foreign exchange transactions remain unrestricted in terms of amount, the Draft Rules propose stricter documentary verification requirements, differentiated by the type of licensed service provider.

1. Transactions Conducted Through Commercial Banks

A. Transactions of USD 200,000 or More (or equivalent)

Commercial banks are required to verify supporting documents corresponding to the declared source of funds on a transaction-by-transaction basis.

Exception: Documentary verification may be waived for routine transactions of business customers that are well known to the bank and subject to ongoing KYB and Customer Due Diligence (“CDD”) processes.

B. Certain High-Risk Inbound Transactions

For inbound transactions that may be used for non-business-related purposes or where the source of funds is unclear, commercial banks would be required to obtain supporting documentation on a transaction-by-transaction basis, even if the customer has already undergone KYC/KYB procedures. Such transactions include, but are not limited to:

  • Proceeds from the sale of real estate
  • Proceeds from the sale of digital assets
  • Capital inflows other than direct investment or securities investment
  • Other income sources that cannot be clearly identified

C. Digital Asset-Related Proceeds

Where foreign currency is derived from the sale of digital assets, banks must additionally obtain documents evidencing either:

  • The source of the digital assets, or
  • The source of funds used to acquire such digital assets.

2. Transactions Conducted Through Non-Bank Operators

A. Transactions of USD 200,000 or More (or equivalent)

Non-bank operators would be required to verify supporting documents corresponding to the declared source of funds for every transaction, without exception.

B. Digital Asset-Related Proceeds

Supporting documents evidencing the source of the digital assets or the funds used to acquire such assets must be obtained in all cases.

C. Inbound Cash Transactions Exceeding USD 15,000 (or equivalent)

Non-bank operators must obtain the customs declaration evidencing that the cash was declared to Thai Customs authorities upon entry into Thailand.

Potential Impacts

  • High-value transaction participants and business operators not subject to ongoing KYB processes, or whose transactions fall within categories requiring enhanced scrutiny, may face increased compliance burdens, particularly in preparing and submitting supporting documentation.
  • Commercial banks and non-bank operators will bear additional compliance and operational responsibilities in verifying documents and ensuring adherence to the enhanced regulatory standards.

Conclusion

The Draft Rules represent a clear move toward stricter verification of inbound foreign exchange transactions, particularly for high-value transfers and funds derived from digital assets or non-traditional sources. Although inbound transactions remain unrestricted in amount, documentation requirements will increase significantly. Market participants should review their transaction structures and supporting documentation in advance to ensure readiness once the rules are finalized.

Author: Panisa Suwanmatajarn, Managing Partner.

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In-Principle Cabinet Approval of Thailand’s 2025 Permanent Residence Quota: Strengthening Long-Term Investment Confidence

The Thai Cabinet has granted in-principle approval to the Draft Notification of the Office of the Prime Minister and the Ministry of Interior on the Determination of the Annual Quota of Foreign Nationals Eligible for Permanent Residence in Thailand for B.E. 2568 (2025), as proposed by the Ministry of Interior. This development holds particular significance for the business and investment communities, as it enhances regulatory certainty for foreign investors seeking long-term stability and lawful residence in Thailand, especially given the substantial contribution of foreign investment to the Thai economy.

While Section 40 of the Immigration Act B.E. 2522 (1979) prescribes the maximum number of foreign nationals eligible for permanent residence, this provision merely establishes a statutory ceiling. A separate annual notification is required to formally determine and activate the quota for each calendar year, thereby enabling lawful approvals under Section 41 of the Immigration Act B.E. 2522 (1979).

Annual Quota for Permanent Residence for B.E. 2568 (2025)

  • Up to 100 persons per nationality
  • Colonies of any country, or territories with autonomous administration, shall be treated collectively as one nationality
  • Up to 50 stateless persons

Key Implications for Business and Investment Sectors

1. Annual Quota Determination Process
The permanent residence quota is determined annually based on prevailing demand, subject to the statutory maximum prescribed under Section 40 of the Immigration Act B.E. 2522 (1979).

2. Enhanced Strategic Workforce Planning
Clearly defined annual quotas enable businesses to plan immigration strategies for foreign employees and key personnel more effectively and with greater foresight.

3. Workforce Stability and Talent Retention
A structured pathway to permanent residence facilitates the retention of qualified foreign professionals and minimizes immigration-related operational disruptions.

4. Investment Confidence and Risk Mitigation
Cabinet-level approval of the annual quota reinforces regulatory legitimacy and reduces uncertainty for investors making long-term capital commitments in Thailand.

5. Economic Ecosystem Development
Strengthening Thailand’s appeal as a long-term destination for foreign nationals indirectly supports ancillary sectors including real estate, education, healthcare, and lifestyle industries.

Conclusion

Thailand’s annual permanent residence quota operates within a structured statutory framework under the Immigration Act B.E. 2522 (1979), providing regulatory clarity and predictability for foreign nationals, businesses, and investors seeking long-term establishment in the Kingdom. This systematic approach strengthens investor confidence and reinforces Thailand’s position as a regional hub for sustained investment and high-skilled talent acquisition.

Author: Panisa Suwanmatajarn, Managing Partner.

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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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Date: 2-6 May 2026 (Onsite), Time Zone (GMT)(UK, Ireland, Lisbon Time)

Venue: Excel London, Royal Victoria Dock, 1 Western Gateway, London E16 1XL, UK

For more details, please visit: 2026 Annual Meeting – International Trademark Association

Schedule for a meeting

Remarks:

  • Please change timezone to be “UK, Ireland, Lisbon Time” before book a meeting.
  • For confirmation of our meeting, an invitation will be sent to your calendar.

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Tax Obligations and Compliance for Foreign Residents in Thailand

Under Thailand’s taxation framework, foreign individuals residing in the country are subject to specific tax obligations, particularly when they are also liable for taxation in other jurisdictions. This article provides a comprehensive overview of the Thai tax system for individuals residing in Thailand for 180 days or more, including the requirements for filing tax returns, allowable deductions, the application of Double Taxation Agreements, and penalties for non-compliance.

Tax Residency and Taxable Income in Thailand:

According to Thai tax law, an individual who resides in Thailand for a cumulative period of 180 days or more within a calendar year (1 January to 31 December) is classified as a “tax resident of Thailand.” Tax residents are subject to Personal Income Tax (PIT) on the following categories of income:

  1. Income Derived from Sources Within Thailand:
Such income is taxable regardless of whether it is paid within Thailand or abroad.
  1. Foreign-Sourced Income:
Such income is subject to Thai PIT if it is earned on or after 1 January 2024 and remitted to Thailand in any year. However, foreign-sourced income earned prior to 1 January 2024 is exempt from Thai PIT, even if remitted to Thailand on or after 1 January 2024.

Tax Return Filing Requirements:

Thai tax residents who earn income from sources within Thailand or who remit foreign-sourced income to Thailand (as described above) are required to file a tax return with the Thai Revenue Department within 31 March of the following year for the preceding calendar year’s income.

Deductions and Allowances:

Not all income is subject to taxation, as certain types of income are exempt, including severance pay up to a specified amount, retirement benefits, and bank interest that has already been withheld at source. Additionally, taxpayers may claim deductions for various expenses based on the type of income received.

Double Taxation Agreements (DTAs) and Tax Credits:

To mitigate the risk of double taxation, Thailand has entered into DTAs with various countries. These agreements aim to prevent income from being taxed in both Thailand and the country where it was earned. Foreign residents subject to Thai PIT may be eligible for either a tax exemption or a foreign tax credit, depending on the provisions of the applicable DTAs and the type of income involved.

Penalties for Non-Compliance:

Failure to comply with the above requirements results in fines and surcharges.

Conclusion:

Foreign residents in Thailand who meet the 180-day residency threshold must carefully navigate their tax obligations to ensure compliance with Thai tax law. This includes understanding the scope of taxable income, both from Thai and foreign sources, fulfilling tax return filing requirements, leveraging allowable deductions and DTAs benefits, and adhering to deadlines to avoid penalties. By maintaining accurate records and submitting properly certified documentation, taxpayers can effectively manage their tax liabilities and ensure compliance with the Thai Revenue Department’s regulations. 

Source: International Comparison December 2025: Antea

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