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Cannabis Regulation 2025: Balancing Business Opportunities and Legal Boundaries

Background

Cannabis was historically subject to strict prohibition in Thailand, encompassing cultivation, possession, sale, and consumption. In 2022, the government implemented a significant policy shift by removing cannabis from the narcotics list and reclassifying it as a “controlled herb” under a Ministry of Public Health notification issued in the same year. A subsequent notification was published in November 2022 to clarify that cannabis use was intended strictly for medicinal and herbal purposes.

Following a comprehensive policy review in 2025, the Ministry of Public Health issued the Notification Re: Controlled Herbs (Cannabis), B.E. 2568 (2025) (“New Notification”), which took effect on June 26, 2025. This New Notification supersedes the previous notification and establishes a more comprehensive and stringent framework for cannabis control.

Key Provisions of the New Notification

1. Expanded Scope of Control

The New Notification broadens regulatory control from specifically Cannabis Sativa L. to encompass all species within the Cannabis genus of the Cannabaceae family, thereby closing previous legal gaps. Only cannabis flowers are classified as controlled herbs, while other plant parts (leaves, stems, roots) remain exempt unless processed into products containing psychoactive substances.

2. Sales Restricted to Licensed Operators

Licensees under Section 46 may trade or process cannabis exclusively with other licensed parties. Sales to the general public, through online platforms, vending machines, or any form of advertising are strictly prohibited.

3. Quality Control of Cultivation Sources

All cannabis designated for commercial sale or export must originate from cultivation sites certified under Good Agricultural and Collection Practices (GACP) by the Department of Thai Traditional and Alternative Medicine.

commercial cannabis growing under lamps

4. Medical Use Exemption

Cannabis may be dispensed to individuals possessing a valid prescription from a licensed medical professional. Prescriptions must specify the required quantity and are limited to a maximum 30-day supply, following the format prescribed by the Director-General.

5. Additional Prohibitions

Cannabis sales are prohibited in religious venues, dormitories, public parks, amusement parks, and zoos. Advertising of cannabis or related products remains strictly banned across all channels.

Impact on Stakeholders

The New Notification reinstates a strict control framework governing cannabis use and commerce in Thailand. The regulation presents both opportunities and challenges for various stakeholders.

Positive Impacts

The framework elevates industry standards by ensuring safety and product quality, promotes regulated medical and herbal use, and enables compliant businesses to operate legally and sustainably. It also mitigates health risks for consumers and enhances Thailand’s international reputation as a country that manages cannabis responsibly, particularly in relation to nations where cannabis remains a controlled narcotic.

Challenges

The New Notification presents significant challenges, particularly for small businesses operating outside the licensing system, which may be required to cease operations or substantially modify their business models. The regulation also restricts marketing opportunities and direct-to-consumer sales channels, potentially limiting access for non-patient users or individuals seeking cannabis for general wellness purposes.

Conclusion

Despite the implementation of stricter restrictions, this notification represents a foundational step in establishing a long-term, structured cannabis policy framework for Thailand. Business operators are advised to prepare accordingly, ensure compliance with licensing requirements, and closely monitor regulatory developments to operate sustainably in this evolving landscape.

The regulatory framework reflects Thailand’s commitment to balancing economic opportunities with public health considerations, positioning the country as a responsible leader in cannabis regulation within the Southeast Asian region.

Author: Panisa Suwanmatajarn, Managing Partner.

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Closing Nominee Loopholes: Thailand’s Legal Reform to Safeguard Property Ownership

On 24 June 2025, the Cabinet formally acknowledged the “Findings and Recommendations of the Ombudsman Regarding the Ownership or Possession of Land or Real Estate by Nominees Acting on Behalf of Foreigners.” These recommendations were submitted in response to growing concerns over the circumvention of land ownership laws by foreign nationals through the use of Thai nominees.

This initiative follows the discovery of widespread land and property acquisitions by foreign nationals, raising significant concerns regarding national security, economic stability, and equality of opportunity for Thai citizens. In numerous instances, foreigners have circumvented legal restrictions by utilizing Thai nominees to bypass requirements such as marriage to Thai citizens, land ownership through Thai children, long-term leases, and company structures that disguise actual control.

One prevalent mechanism involves establishing a Thai-registered legal entity that appears to be locally owned but is ultimately controlled by foreign interests through nominee shareholders or preference shares. This practice not only undermines the intent of existing legislation but also contributes to rising land prices, thereby reducing accessibility for Thai nationals—particularly in high-demand areas such as Bangkok and Chiang Mai.

Key Recommendations

1. Department of Business Development (DBD)

The DBD has been designated to play a central role in preventing and monitoring nominee arrangements, particularly in legal entities with foreign shareholding:

  1. System Development
  • Developing an AI-driven system to process and analyze corporate data to identify high-risk juristic persons potentially acting as nominees.
  1. Amendment to the Foreign Business Act B.E. 2542 (1999) (FBA) to include:
  • A broader definition of “foreigner” to encompass those exercising control or management through Thai nominees.
  • Clear definitions of “nominee” and “disguised transaction” to cover indirect ownership and concealed financial or property dealings.
  • Explicit inclusion of both direct and indirect shareholding in regulatory scrutiny, with enhanced qualifications for the 51% Thai shareholders.
  • Classification of legal entities controlled through preference shares as foreign juristic persons.
  • Updated requirements for registered capital, including mandatory submission of evidence demonstrating actual payment (e.g., bank statements) to prevent false declarations.
  • Designation of FBA violations as predicate offenses under the Anti-Money Laundering Act, enabling asset seizure during investigations.
  • Granting the DBD investigative and arrest powers in nominee-related offenses.
peaceful coast washed by calm water of endless ocean

2. Department of Lands

  1. Enforcement Guidelines
  • Issuance of clear enforcement guidelines and their widespread circulation to prevent land ownership by foreign nationals through nominee arrangements.
  1. Amendments to the Land Code to:
  • Increase penalties for foreigners violating land ownership laws.
  • Forfeit unlawfully held land to the state without compensation to the foreign holder.

3. Lawyers Council of Thailand

  1. Code of Ethics
  • Introduction and enforcement of a binding code of ethics that prohibits legal professionals from advising on or facilitating nominee structures.
  1. Professional Conduct Rules
  • Establishment of professional conduct rules to ensure lawyers do not support arrangements that bypass foreign ownership restrictions.

Implementation Framework

The Ministry of Commerce has been designated as the principal agency to deliberate on this matter in collaboration with relevant agencies and to submit the outcome of such deliberations to the Cabinet Secretariat within 30 days for further consideration by the Cabinet.

The Cabinet has acknowledged the Ombudsman’s findings and recommendations, directing the Ministry of Commerce to conduct a comprehensive review of the issue. The Ministry of Commerce will collaborate with 13 other agencies, including Ministry of Finance, Ministry of Agriculture and Cooperatives, Ministry of Natural Resources and Environment, Ministry of Interior, Ministry of Justice, Ministry of Labor, Ministry of Industry, Board of Investment, Royal Thai Police, Anti-Money Laundering Office, Internal Security Operations Command and Bank of Thailand.

This joint effort aims to reach a definitive resolution within 30 days, with the Ministry of Commerce responsible for submitting a summary of its findings, actions taken, and overall recommendations to the Cabinet Secretariat for further consideration.

Conclusion

The Cabinet’s recognition of the Ombudsman’s findings represents a crucial step in addressing a long-standing loophole in Thailand’s property ownership regulations. While foreign investment remains vital to Thailand’s economy, the misuse of nominee structures has distorted the property market and undermined legal integrity. The lack of unified enforcement and ambiguous legal definitions have limited the government’s ability to effectively regulate foreign participation in land ownership.

With a whole-of-government approach now underway, Thai authorities aim to restore fairness, uphold legal safeguards, and ensure that land and property ownership align with national interests. The forthcoming recommendations from the Ministry of Commerce and its partner agencies will be decisive in shaping future land policies and enforcement mechanisms.

Author: Panisa Suwanmatajarn, Managing Partner.

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The Ripple Effect EP. 7: Thailand Set to Begin Official Tariff Negotiations with the U.S.

Following the formal agreement to commence tariff negotiations with the United States, the Thai government is preparing to submit its official trade proposal to the U.S., with the first round of discussions scheduled to take place at a conference meeting.

Background and Current Status

Thailand recently participated in an online negotiation session with the United States Trade Representative (USTR), during which the U.S. outlined five key priority areas for Thailand’s consideration. These priorities are designed to foster a more balanced and mutually beneficial trade relationship between the two countries.

U.S. Priority Areas

The USTR has identified the following five strategic areas for negotiation:

  1. Tariff measures and import quotas – Addressing existing trade barriers and quota restrictions
  2. Non-tariff trade barriers (NTBs) – Eliminating regulatory and administrative obstacles to trade
  3. Digital trade management – Establishing frameworks for digital commerce and data flows
  4. Enforcement of rules of origin – Strengthening compliance mechanisms for trade agreement provisions
  5. Economic and national security measures – Addressing security-related trade concerns

Timeline and Deliverables

The meeting served to clarify U.S. proposals and establish clear expectations. The USTR has requested that the Thai government submit its initial proposals, addressing the five main areas outlined above, by June 20, 2025, and the Thai government has already submitted so. The negotiations operate under a 90-day framework, with discussions expected to conclude by July 8, 2025. Should additional time be required, the U.S. is anticipated to extend the negotiation period.

Thailand’s Negotiation Strategy

Thailand remains confident that its proposals will yield positive outcomes. The preliminary offers previously presented by Thailand include:

  • Tariff reductions on specific imported goods
  • Procurement commitments for Boeing aircraft and U.S. military equipment
  • Reduction of non-tariff barriers

These proposals are considered substantial enough to encourage serious U.S. consideration and facilitate detailed negotiations. Thailand’s objective is to achieve a final tariff rate not exceeding 10%.

Confidentiality Constraints

Due to the signing of a Non-Disclosure Agreement (NDA), the Thai government is unable to disclose specific details of the ongoing negotiations.

Strategic Implications

The proposed tariff negotiations reflect the broader trade policy objectives of the U.S. government, which seeks to address trade imbalances and promote fairness in global commerce. These negotiations represent a critical juncture for Thailand in maintaining access to one of its most valuable export markets.

The outcome will have direct implications for Thai exporters and the overall bilateral economic relationship. This relationship remains subject to considerable uncertainty, particularly within the context of a challenging global economic environment.

boat in body of water

Recommendations

Stakeholders on both sides are advised to:

  • Closely monitor negotiation developments
  • Prepare comprehensive contingency plans for all possible outcomes
  • Maintain flexibility in strategic planning given the evolving nature of trade discussions

Conclusion

These negotiations constitute a pivotal moment in Thailand-U.S. trade relations. The successful resolution of these discussions will be instrumental in shaping the future economic partnership between the two nations and determining Thailand’s continued access to the U.S. market. Given the complexity of the issues at stake and the broader geopolitical context, careful attention to both the negotiation process and its outcomes will be essential for all stakeholders involved.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand’s Free Trade Agreement Strategy in 2025

Thailand continues to pursue an ambitious trade liberalization agenda through its comprehensive Free Trade Agreement (FTA) strategy. The Department of Trade Negotiations (DTN) announced on June 13, 2025, significant progress across multiple bilateral and multilateral trade negotiations, positioning Thailand to strengthen its integration with the global economy while expanding market access for domestic exporters.

Current FTA Negotiations and Timeline

Priority Bilateral Agreements

Thailand is actively advancing negotiations on several key bilateral FTAs with strategic trading partners. The Thailand-South Korea FTA represents the most advanced negotiation, with the DTN projecting completion within 2025. Concurrently, discussions on the Thailand-European Union FTA continue to progress, though no specific timeline has been established for conclusion.

Thailand and Peru negotiations to complete their comprehensive trade agreement are moving toward finalization, with an ambitious target completion date of August 2025.

Multilateral and Regional Initiatives

On the multilateral front, Thailand is participating in the ASEAN-Canada FTA negotiations, with completion targeted for 2026. This agreement would provide Thai exporters with preferential access to the Canadian market while strengthening ASEAN’s economic ties with North America.

Several agreements are progressing through internal approval processes, including FTAs with Sri Lanka, the European Free Trade Association (EFTA), and Bhutan. These agreements, once ratified, will expand Thailand’s preferential trading network across diverse geographic regions.

Regional Trade Integration

ASEAN has successfully concluded negotiations on upgraded versions of existing trade agreements. The enhanced ASEAN-Australia-New Zealand FTA (AANZFTA) has been signed, while the negotiations for upgrading the ASEAN-China FTA (ACFTA) and the ASEAN Trade in Goods Agreement (ATIGA) have been completed. Negotiations are also underway to upgrade the ASEAN-India Trade in Goods Agreement (AITIGA), with the aim of modernizing its provisions and aligning it more closely with the current economic situation. These upgraded agreements are expected to provide deeper economic integration and expanded coverage of modern trade issues.

Digital Economy Framework Agreement

Thailand is participating in negotiations for the ASEAN Digital Economy Framework Agreement (DEFA), which aims for completion within 2025. This groundbreaking initiative is positioned to become the world’s first regional digital economy pact, addressing critical areas including artificial intelligence, financial technology, cybersecurity, and anti-online fraud.

Sectoral Impact and Benefits

The expanding FTA network is expected to deliver substantial benefits across multiple sectors of the Thai economy. Priority sectors include automotive and parts manufacturing, machinery production, electronics, gems and jewelry, processed food products, fruits and vegetables, tourism services, business services, construction, transport and logistics, and retail trade.

These agreements will provide Thai businesses with enhanced market access through reduced tariffs, streamlined customs procedures, and improved regulatory frameworks. The comprehensive coverage of both goods and services trade ensures that benefits will extend across Thailand’s diverse economic base.

Institutional Cooperation Mechanisms

The DTN plans to convene Joint Trade Committee (JTC) meetings with key trading partners, including Laos, the Philippines, and the United Kingdom. These institutional mechanisms serve to monitor agreement implementation, address trade issues, and identify opportunities for enhanced bilateral cooperation.

Furthermore, the DTN is developing comprehensive outreach programs in collaboration with public and private sector stakeholders. These initiatives focus on enhancing understanding of FTA benefits and utilization among Thai entrepreneurs, particularly in sectors with strong export growth potential.

Trade Performance Analysis

2024 Performance Metrics

Thailand’s trade with its 18 FTA partners reached USD 360.34 billion in 2024, representing 59.3% of the country’s total international trade. The trade balance showed a deficit, with exports totaling USD 154.1 billion and imports reaching USD 172.05 billion to FTA partner countries.

First Quarter 2025 Results

Trade momentum with FTA partners has continued into 2025, with first-quarter trade totaling USD 96.91 billion, accounting for 60% of Thailand’s total trade volume. Exports reached USD 45.14 billion (55% of total exports), while imports totaled USD 51.76 billion (64% of total imports).

Key Trade Commodities

Thailand’s primary export products to FTA partners include automobiles and automotive parts, refined petroleum products, plastic pellets, gems and jewelry, computers and electronic components, and electrical circuit boards. These exports reflect Thailand’s competitive advantages in manufacturing and value-added production.

Import patterns focus on production inputs that support domestic manufacturing capabilities, including electrical and mechanical machinery, chemical products, steel and metal products, and various metal ores and scrap materials. This import composition supports Thailand’s integration into regional and global value chains while enabling higher value-added domestic production.

Strategic Outlook

Thailand’s comprehensive FTA strategy reflects a systematic approach to economic integration that balances market access opportunities with domestic industrial development objectives. The negotiation timeline demonstrates Thailand’s commitment to concluding high-quality agreements that deliver tangible benefits for Thai businesses and consumers.

As these negotiations progress toward completion and existing agreements undergo upgrades, Thai businesses are positioned to benefit from expanded market access, reduced trade barriers, and enhanced opportunities for international growth. The success of this strategy will ultimately depend on effective implementation and utilization of preferential trade benefits across Thailand’s diverse economic sectors.

The integration of digital economy provisions through DEFA represents Thailand’s forward-looking approach to trade policy, ensuring that agreements address contemporary challenges and opportunities in the digital transformation of international commerce.

Author: Panisa Suwanmatajarn, Managing Partner.

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How the Act for the Establishment of and Procedure for the Tax Court (No. 3) B.E. 2568 (2025) Transforms Tax Dispute Litigation

Background

The litigation of tax disputes in Thailand has historically been governed by the Act for the Establishment of and Procedure for the Tax Court B.E. 2528 (1985) and the Regulation on Tax Cases B.E. 2544 (2001). Since having been enforced until the enforcement of their amendments, the Tax Court’s jurisdiction has been confined exclusively to civil matters. In cases involving both tax-related civil and criminal issues, plaintiffs have been required to bifurcate their proceedings, filing criminal complaints with criminal courts having jurisdiction over the cases while pursuing civil remedies through the Tax Court.

Legislative Reform

This procedural framework is set to undergo significant transformation under the Act for the Establishment of and Procedure for the Tax Court (No.3) B.E. 2568 (2025), which substantially expands the Tax Court’s jurisdiction to encompass criminal tax offenses. This expansion reflects the legislature’s recognition that adjudicating tax-related criminal matters requires specialized expertise in tax law and revenue collection systems.

Key Amendments

1. Expansion of Criminal Jurisdiction

The Tax Court is now vested with the authority to adjudicate criminal cases arising under the following statutes:

  • The Revenue Code
  • The Customs Act
  • The Excise Tax Act
  • Additional offenses as may be designated by the Royal Decree

Exception: Cases falling under the jurisdiction of the Juvenile and Family Court remain excluded from this expanded mandate.

close up photo of wooden gavel

Jurisdictional Guidelines:

  • Single Act, Multiple Violations: Where a single act violates multiple provisions of tax legislation, the Tax Court shall exercise comprehensive jurisdiction over the entire matter.
  • Multiple Acts: In cases involving multiple acts where some fall outside the Tax Court’s jurisdiction, the Tax Court possesses discretionary authority to either:
    • Consolidate and adjudicate all acts collectively; or
    • Exercise jurisdiction solely over matters within its competence while requiring plaintiffs to pursue separate proceedings in those jurisdictional courts for remaining offenses.

2. Procedural Law Modernization

The amendment introduces significant procedural reforms. Previously, tax cases were governed exclusively by the Civil Procedure Code applied mutatis mutandis. Under the revised framework, the Tax Court may now apply:

  • The Criminal Procedure Code (mutatis mutandis); and
  • Procedural rules governing district courts (mutatis mutandis)

This dual procedural framework provides the Tax Court with enhanced flexibility to address the hybrid nature of tax disputes effectively.

3. Court Hearing Notification Protocols

The Act establishes differentiated notification requirements:

General Civil Cases: Parties failing to appear at scheduled hearings bear responsibility for obtaining subsequent hearing dates from the Tax Court. Failure to do so results in constructive notice of future proceedings.

Criminal Cases: The aforementioned rule does not apply, ensuring enhanced due process protections in criminal tax matters.

Implementation Timeline

The Act for the Establishment of and Procedure for the Tax Court (No. 3) B.E. 2568 (2025), will enter into force 180 days after the date of publication in the Royal Gazette (25 May 2025). Importantly, the legislation does not apply retroactively to criminal tax cases already pending in other jurisdictional courts prior to the effective date.

Stakeholder Concerns and Future Considerations

During the legislative drafting process, certain stakeholders raised substantive concerns regarding the fundamental nature of tax dispute resolution. They argued that tax cases are inherently administrative disputes and that the current accusatorial system, adopted due to the Tax Court’s establishment preceding that of the administrative court, creates systemic disadvantages for private litigants contesting state authorities. These stakeholders advocated for adopting an inquisitorial system similar to that employed by the administrative court, arguing that the current framework places an undue evidentiary burden on individuals lacking the resources and access necessary to effectively challenge governmental determinations. While these proposals were not incorporated into the current amendment, given the legislation’s focused objective of ensuring specialized judicial expertise in criminal tax matters, such considerations remain significant and may inform future legislative reforms.

Conclusion

The Act for the Establishment of and Procedure for the Tax Court (No. 3) B.E. 2568 (2025) represents a meaningful evolution in Thailand’s tax dispute resolution framework. By consolidating both civil and criminal tax jurisdiction within a specialized court system, the legislation aims to enhance judicial efficiency and ensure that complex tax matters receive appropriate expert consideration. This reform establishes a foundation for more comprehensive future developments in Thai tax litigation.

Author: Panisa Suwanmatajarn, Managing Partner.

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Proposed Amendments to Company Registration Rules: Addressing Foreign Investment and Nominee Structures

The registration of companies in Thailand involving foreign nationals as shareholders or authorized directors is currently governed by Order No. 205/2555 of the Central Partnership and Company Registration Office: Re Criteria and Supporting Documents Required for the Registration of Partnerships and Limited Companies in Cases Involving Foreign Investment or Authorized Persons (the “Existing Order“).

This regulatory framework is designed to verify the legitimate financial standing of such entities by mandating bank certification that confirms both the Thai shareholder’s nationality and financial capacity, supplementing standard registration documentation requirements.

Background and Rationale

Thailand has encountered persistent challenges concerning the utilization of nominee shareholders, Thai nationals serving as proxies for foreign investors, across diverse business sectors. This practice demonstrates particular prevalence in tourism, hospitality services, real estate development, and construction industries, presenting substantial risks to the nation’s economic integrity and national security framework.

In recognition of these concerns, the Ministry of Commerce has identified the necessity for enhanced regulatory oversight governing the registration of partnerships and limited companies involving foreign participation.

Proposed Regulatory Framework

To address these challenges comprehensively, the Draft Order No. [..] issued by the Central Partnership and Company Registration Office: Re Criteria and Supporting Documents for the Registration of Partnerships and Limited Companies (the “Draft Order“), has been developed to supersede the Existing Order.

The Draft Order is strategically designed to prevent the misuse of Thai nominees to obscure foreign ownership structures in Thai business operations. Consequently, the Draft Order establishes more rigorous documentation requirements compared to the current regulatory framework.

three people sitting beside table

Key Provisions of the Draft Order

1. Enhanced Documentation Requirements

Where foreign investors constitute joint investors or serve as authorized signatory individuals empowered to legally bind partnerships or limited companies, registration applicants must submit comprehensive supporting documentation for each Thai partner or shareholder concurrent with the registration application.

2. Source of Investment Capital Verification

Registration applicants must provide substantive evidence of the legitimate source of investment funds for Thai shareholders or partners through submission of one of the following documents:

  • Financial Institution Certification: Bank certification issued by a Thai financial institution verifying the Thai shareholder’s financial standing and capacity;
  • Banking Transaction Records: Copies of the shareholder’s bank statements demonstrating account activity over the preceding six-month period;
  • Tax Documentation: Copies of the shareholder’s income tax returns (individual or corporate, as applicable); or
  • Alternative Documentation: Other relevant documents that adequately demonstrate the legitimate source and nature of investment funds.

Public Consultation Process

The Draft Order is currently subject to public consultation to solicit comprehensive feedback from relevant stakeholders and the broader business community. Following the conclusion of the consultation period, the Department of Business Development will conduct a thorough review and finalize the Draft Order to ensure its alignment with contemporary business practices and regulatory requirements, with implementation scheduled to occur upon completion of the review process.

Conclusion and Strategic Impact

The Draft Order constitutes a substantial advancement in regulatory oversight, designed to enhance transparency and eliminate the misuse of Thai nominee structures in business registrations involving foreign investment. Through the implementation of comprehensive documentation requirements and strengthened regulatory supervision, the Draft Order seeks to ensure that corporate ownership structures accurately reflect legitimate investment activities and maintain full compliance with Thai legal requirements.

Upon final adoption and implementation, this regulatory enhancement is anticipated to strengthen investor confidence while simultaneously protecting Thailand’s economic sovereignty and national security interests. The measure represents a balanced approach to foreign investment regulation, promoting legitimate business activities while preventing circumvention of existing ownership restrictions.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand’s Strategic Tax Reform: Encouraging SEZ Investment Through Reduced Corporate Tax Rates

On January 13, 2025, the Thai Cabinet approved in principle a draft Royal Decree issued under the Revenue Code, establishing a comprehensive tax incentive framework to promote investment in Special Economic Zones (SEZs). This initiative reduces the Corporate Income Tax (CIT) rate to 10% for qualifying entities engaged in targeted activities within designated SEZ areas. The Royal Decree officially took effect on June 6, 2025, as the “Royal Decree Issued under the Revenue Code on the Reduction of Tax Rates (No. 797), B.E. 2568 (2025).“

Thailand’s commitment to SEZ development is demonstrated through comprehensive support including infrastructure development, investment incentives, streamlined labor management, and integrated one-stop services. Currently, 10 SEZs operate in strategic border locations: Tak, Mukdahan, Sa Kaeo, Songkhla, Trat, Nong Khai, Narathiwat, Chiang Rai, Nakhon Phanom, and Kanchanaburi.

Key Provisions of the Royal Decree

1. Corporate Income Tax Reduction

The Royal Decree establishes a preferential CIT rate of 10% of net profit for companies and juristic partnerships engaged in Board of Investment (BOI)-designated targeted activities. Eligible enterprises must operate within SEZ boundaries, regardless of their headquarters location, and derive income from manufacturing goods or providing services utilized within the SEZs.

This substantial tax incentive applies for 10 consecutive accounting periods, providing long-term investment certainty for businesses planning significant capital commitments in these strategic areas. The accounting period framework is defined as follows:

  • Standard Timeline: If an accounting period commences on or after the date of business registration with the Revenue Department (RD) for SEZ tax benefits, that period constitutes the first accounting period in the sequence.
  • Mid-Period Registration: If a business registers for SEZ tax benefits during an ongoing accounting period, that period remains counted as the first, even if its duration is less than twelve months.

2. Establishment Requirements for New Registered Juristic Persons

The Royal Decree establishes distinct requirements based on entity establishment dates:

  • Post-Effective Date Entities: Companies or juristic partnerships established after June 6, 2025, must maintain business premises within SEZs that consist of permanent structures.
  • Pre-Existing Entities: For entities registered before June 6, 2025, any premises established within SEZs must comprise permanent buildings and represent either an expansion of or addition to existing facilities.

3. Comprehensive Eligibility Criteria

To qualify for the reduced 10% CIT rate, companies and juristic partnerships must satisfy multiple specific requirements:

  • Registration Compliance: Entities must register with the RD to claim SEZ tax benefits in accordance with prescribed rules and procedures.
  • Investment Promotion Act Compatibility: Entities must not simultaneously claim CIT exemption, whether in whole or in part, under the Investment Promotion Act.
  • Revenue Code Exclusivity: Entities must not claim any alternative CIT reduction provisions under the Revenue Code.
  • Accounting Segregation: Entities must maintain separate accounting records distinguishing between activities eligible and ineligible for SEZ tax benefits.
  • Regulatory Adherence: Entities must comply with all criteria, methods, and conditions as announced by the RD.

4. Termination Provisions for Tax Incentive Eligibility

The Royal Decree establishes strict enforcement mechanisms for maintaining eligibility. Should any company or juristic partnership fail to meet eligibility requirements during any accounting period, entitlement to the reduced CIT rate terminates immediately, effective from that specific accounting period.

Strategic Economic Impact

This tax incentive framework is projected to significantly enhance investment flows into SEZs, catalyzing increased industrial activity and employment generation in border regions. The initiative strengthens Thailand’s competitive positioning and reinforces its strategic potential as a regional economic hub within the ASEAN framework.

Conclusion

The implementation of the 10% CIT rate under this Royal Decree represents Thailand’s strategic commitment to attracting substantial investment into SEZs. Through the provision of long-term tax incentives, establishment of clear operational requirements, and enforcement of rigorous eligibility criteria, the government seeks to enhance SEZ competitiveness while promoting sustainable economic development in border areas.

Businesses seeking to capitalize on these incentives must ensure full compliance with all stipulated conditions to maintain their eligibility status. This framework underscores the critical importance of regulatory adherence as a prerequisite for accessing preferential fiscal treatment, establishing a clear value proposition for compliant investors while maintaining the integrity of Thailand’s tax incentive system.

Author: Panisa Suwanmatajarn, Managing Partner.

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Liquor Production: Empowering Farmers and Small-Scale Entrepreneurs

In June 2025, the Royal Gazette of Thailand published the Excise Tax Act (No. 2) B.E. 2568 (2025), marking a significant reform in the country’s liquor production regulations. Effective June 6, 2025, this legislation amends the Excise Tax Act B.E. 2560 (2017) to facilitate greater access to legal liquor production licenses for farmers, cooperatives, community enterprises, and small-scale entrepreneurs. The act aims to promote economic fairness, support local agriculture, and reduce barriers to entry in the liquor industry while ensuring consumer protection and regulatory compliance.

Background and Purpose:

The Excise Tax Act (No. 2) B.E. 2568 (2025) was enacted to address the restrictive nature of previous regulations, which limited opportunities for small-scale producers to legally enter the liquor market. By revising Section 153 of the Excise Tax Act B.E. 2560 (2017), the new law simplifies the licensing processes and encourages the use of domestic agricultural products in liquor production. This reform aligns with Thailand’s constitutional provisions under Sections 26 and 40, which allow for the restriction of rights and freedoms only to protect consumers and regulate professional activities in a fair and non-discriminatory manner.

The primary objectives of the revised Act are to:

  • Promote economic inclusivity by enabling small-scale producers, including farmers and community enterprises, to obtain liquor production licenses.
  • Support the use of local agricultural products in the production of diverse types of liquor, including flavored or colored varieties.
  • Eliminate unfair economic monopolies and discriminatory practices in the licensing process.
  • Ensure that regulations do not impose undue burdens on applicants, except where necessary to limit foreign ownership or support state enterprises and small-scale industries.

Key Provisions of the Revised Act:

1. Simplified Licensing Processes (Section 3)

The amended Section 153 of the Excise Tax Act B.E. 2560 (2017) allows individuals or entities wishing to produce liquor or possess distillation equipment to apply for a license from the Director-General of the Excise Department. The application and issuance processes are governed by criteria, methods, and conditions outlined in ministerial regulations. These regulations must prioritize:

  • Supporting cooperatives, farmer groups, community enterprises, and small-scale entrepreneurs in obtaining licenses for commercial liquor production.
  • Promoting the use of domestic agricultural products in liquor production.
  • Ensuring fairness by prohibiting criteria that create economic monopolies, discriminatory practices, or unnecessary burdens, except in cases involving foreign ownership restrictions or state enterprises.

Licenses issued under this section are valid for three years from the date of approval.

woman signing documents

2. Transition and Implementation (Section 4)

Existing ministerial regulations, announcements, and rules issued under the Excise Tax Act B.E. 2560 (2017) remain in effect until new regulations are enacted, provided they do not conflict with the amendments. The Ministry of Finance is tasked with issuing updated regulations within 180 days from the revised Act’s effective date (i.e. June 6, 2025).

3. Pending Applications (Section 5)

Applications submitted before the revised Act’s effective date (i.e. June 6, 2025) will be processed under the amended law. If any application does not comply with the new requirements, the Director-General of the Excise Department will notify applicants to make necessary adjustments.

4. Validity of Existing Licenses (Section 6)

Licenses issued under the previous Section 153 remain valid until their expiration, ensuring a smooth transition for current license holders.

5. Oversight and Enforcement (Section 7)

The Minister of Finance is responsible for overseeing the implementation of the revised Act, ensuring compliance with its provisions and objectives.

Implications for Stakeholders:

Farmers and Agricultural Communities

The revised Act empowers farmers and agricultural cooperatives by allowing them to transform local produce into value-added liquor products. This creates new income streams and supports rural economies by leveraging Thailand’s rich agricultural resources.

Small-Scale Entrepreneurs

By removing discriminatory barriers and simplifying the licensing process, the act enables small-scale entrepreneurs to enter the liquor market legally. This fosters innovation, encourages the production of unique and artisanal liquors, and promotes competition in an industry previously dominated by larger players.

Consumers

The Revised Act’s emphasis on consumer protection ensures that all liquor produced under the new licensing framework meets safety and quality standards. Consumers may also benefit from a wider variety of locally produced liquors, potentially at more competitive prices.

Government and Regulatory Bodies

The Excise Department is tasked with developing clear and fair regulations within the 180-day timeframe. This includes establishing standards for liquor production and ensuring that the licensing process is accessible and transparent.

Challenges and Considerations:

While the act is a significant step toward economic inclusivity, its success depends on the timely issuance of clear ministerial regulations. The 180-day deadline for updating rules is critical to avoid delays in implementation. Additionally, the Excise Department must balance consumer safety with the need to minimize bureaucratic hurdles for small-scale producers. Monitoring foreign ownership and ensuring compliance with production standards will also be key to maintaining fairness and protecting local interests.

person holding clear glass

Conclusion:

The Excise Tax Act (No. 2) B.E. 2568 (2025) represents a transformative shift in Thailand’s liquor industry, unlocking opportunities for farmers, cooperatives, and small-scale entrepreneurs. By promoting the use of domestic agricultural products and eliminating unfair barriers, the act fosters economic growth, innovation, and inclusivity. As Thailand moves toward a more equitable and vibrant liquor market, the effective implementation of this legislation will be crucial to realizing its full potential.

Key Takeaways:

  • Transition Period: Existing licenses remain valid, and pending applications will be processed under the revised Act and its regulations, with adjustments as needed.
  • Effective Date: The Excise Tax Act (No. 2) B.E. 2568 (2025) takes effect on June 6, 2025, with new regulations to be issued within 180 days.
  • Simplified Licensing: The amended Section 153 facilitates access to liquor production licenses for farmers, cooperatives, and small-scale entrepreneurs.
  • Support for Local Agriculture: The revised Act encourages the use of domestic agricultural products in liquor production and boosting rural economies.
  • Fairness and Transparency: Licensing criteria must avoid discriminatory practices, monopolies, or excessive burdens, except for foreign ownership restrictions.
  • Consumer Protection: The revised Act ensures that all licensed liquor production meets safety and quality standards.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand Strengthens Global Trade Strategy to Boost Exports and Navigate Global Challenges

Thailand’s Ministry of Commerce recently convened a high-level policy briefing for directors of the Department of International Trade Promotion (DITP) offices across 58 countries. The meeting brought together the Thai Ambassador and Permanent Representative to the World Trade Organization (WTO), the Ambassador for Commercial Affairs, provincial commercial officers from various regions throughout Thailand, and more than 200 participants, including private sector representatives.

The meeting’s primary objective was to enhance inter-agency coordination and adopt a more proactive approach to implementing government trade policies. It also sought to strengthen collaboration between Thai trade officials stationed abroad and the private sector, with particular emphasis on accelerating export growth in the second half of the year. This initiative responds to ongoing global economic uncertainty and emerging challenges, including tariffs imposed by the United States. Despite these obstacles, the government remains optimistic that Thailand’s export sector will achieve growth exceeding 4% by 2025.

Strategic Market Focus

Trade envoys from around the world presented targeted strategies designed to enhance trade opportunities in five key markets:

  1. The United States
  2. India
  3. The Middle East
  4. ASEAN
  5. China
a close up shot of people in agreement

10-Point Policy Framework: “Turning Crisis into Opportunity”

  • Strengthening Export Momentum – The framework capitalizes on Thailand’s consistent export growth to maintain positive economic momentum.
  • Advancing Trade Negotiations – The government is accelerating key Free Trade Agreement negotiations and addressing trade barriers, particularly with the European Union and the United States.
  • Boosting Agricultural Trade – Officials are managing domestic agricultural challenges while opening new markets for key products.
  • Leveraging Soft Power – Thailand is promoting its culture and cuisine through the rebranded Thai SELECT initiative.
  • Seamless Integration – The strategy enhances coordination between provincial and international trade offices for unified trade promotion.
  • Engaging the Private Sector – The government is working closely with businesses to co-develop export strategies and build confidence.
  • Proactive Communication – The Ministry is increasing public awareness of its role and achievements in global trade.

Key Initiatives and Forward Strategy

  • Value-Added Agriculture: Thailand is among the few countries capable of using cassava to produce pharmaceutical capsules, an innovation that could increase the value of agricultural products by more than 100-fold.
  • Expanding Market Reach: The government is targeting new markets in the Middle East and ASEAN while relaunching the Thai SELECT brand with a one-to-three-star rating system, similar to the Michelin Guide, to elevate the global profile of Thai cuisine.
  • Enhanced Collaboration: Trade envoys and provincial commerce offices have been instructed to work closely together, strengthen ties with the private sector, and proactively communicate the Ministry’s progress and impact to the public and key stakeholders.

Conclusion

Thailand’s Ministry of Commerce is intensifying efforts to boost exports through enhanced coordination, strategic market focus, and effective utilization of soft power. Through clear policies and robust public-private collaboration, the nation aims to convert global challenges into trade opportunities and achieve an export growth rate exceeding 4% this year.

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Author: Panisa Suwanmatajarn, Managing Partner.

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