Category: Legal Updates

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Thailand Plans to Reform Excise Tax System to Increase Revenue

Excise tax is one of the principal sources of revenue for the Thai Government (“Government”). For fiscal year 2026 (B.E. 2569), the Government has set a target to collect approximately THB 578.2 billion in excise tax revenue.

In the first quarter of fiscal year 2026 (October 2025 – January 2026), excise tax collection was in total amount of THB 191.3 billion, exceeding the Government’s projection by THB 8.3 billion. The higher-than-expected revenue was largely driven by strong domestic consumption and increased spending during the year-end tourism season and the New Year holidays.

To further strengthen fiscal revenue for fiscal year 2026, the Government is considering several reforms to Thailand’s excise tax system.

Plan to Increase Excise Tax Revenue

The Ministry of Finance aims to increase excise tax revenue by approximately 7.6% through several policy measures, including:

  • restructuring the excise tax framework;
  • adjusting tax rates for certain goods and services; and
  • improving tax administration and enforcement.

The Excise Department has conducted policy studies and is expected to submit the proposed reform plan to the Cabinet for consideration soon.

Proposed Reform of Cigarette Excise Tax

Thailand currently applies a two-tier excise tax system for cigarettes, consisting of the following components:

1. Ad Valorem Tax (Based on Retail Price)

  • 25% for cigarettes priced at not more than THB 72 per pack
  • 42% for cigarettes priced above THB 72 per pack

2. Specific Tax (Based on Quantity)

  • THB 1.25 per cigarette (approximately THB 25 per pack)

According to studies conducted by the Fiscal Policy Office, the current two-tier system has reduced government revenue because cigarette manufacturers often maintain retail prices below the THB 72 threshold in order to benefit from the lower tax rate.

To address this issue, the Excise Department is considering the introduction of a single-tier tax rate, under which cigarettes would be taxed at the same rate regardless of retail price. This approach is expected to reduce price distortions and improve tax collection efficiency.

The Excise Department has requested legal clarification from the Council of State regarding whether the proposed tax structure can be implemented. Further progress will likely depend on the policy direction of the new government.

Automobile Excise Tax Changes

The Government has revised the automobile excise tax framework, with tax rates varying depending on the type of vehicle and its environmental performance. The new tax structure came into effect on 1 January 2026.

Under the revised framework, the excise tax rate is determined primarily based on carbon dioxide (“CO₂”) emission levels, replacing the previous approach that focused mainly on engine displacement (cc). As a result, certain vehicle categories are now subject to higher tax rates compared with those applied in 2025.

Key changes include:

  • Internal combustion engine vehicles (“ICE”) with CO₂ emissions of 100 g/km: the tax rate increased from 12% to 13%.
  • ICE vehicles with engines exceeding 3.0 liters, such as luxury cars and supercars: the tax rate increased from 40% to 50%.
  • Hybrid electric vehicles (“HEV”) with CO₂ emissions not exceeding 100 g/km: the tax rate increased from 4% to 6%.
  • HEV with CO₂ emissions between 101–120 g/km: the tax rate increased from 8% to 9%.
  • HEV with CO₂ emissions between 121–150 g/km: the tax rate increased from 8% to 14%.
  • Electric pickup trucks, which were previously exempt from excise tax, are now subject to 2% tax rate.

As a result of this policy shift, the excise tax rate for vehicles in the eco-car segment has increased from 12% to approximately 13–34%, depending on emission levels.

The Government also plans to gradually increase automobile excise tax rates in two additional phases, during 2028–2029 and again in 2030, as part of its long-term environmental and fiscal policy.

Automobile excise tax collection in the first quarter of fiscal year 2026 increased partly because manufacturers and consumers accelerated vehicle purchases ahead of the tax increase. Following the implementation of the new tax structure on 1 January 2026, tax revenue from automobiles is expected to increase further in the remaining quarters of fiscal year 2026 due to the higher tax rates introduced under the revised framework.

Other Potential Excise Tax Measures

In addition to the proposed reforms to cigarette excise tax and automobile taxation, the Excise Department is also considering further adjustments to excise taxes on several categories of goods and services. However, the specific criteria and potential tax rate changes have not yet been clearly determined.

These potential measures may include:

  • restructuring excise taxes on petroleum and petroleum products;
  • increasing excise tax rates on sin goods, such as alcohol and beer;
  • introducing taxes on products harmful to health, such as a potential salt tax;
  • imposing taxes on environmentally harmful goods, including possible battery or carbon taxes; and
  • reviewing the taxation of luxury goods and services.

Conclusion

Thailand is considering several reforms to its excise tax system in order to strengthen government revenue and improve tax collection efficiency. Key measures include the potential introduction of a single-tier cigarette tax, revisions to the automobile excise tax framework based on vehicle type and CO₂ emissions, and possible adjustments to taxes on petroleum products, alcohol, health-related products, environmentally harmful goods, and luxury goods and services.

These reforms aim not only to increase government revenue but also to support broader policy objectives, such as promoting environmentally friendly vehicles and reducing harmful consumption. However, higher excise tax rates may also increase costs for businesses and retail prices for consumers.

With the revised automobile tax framework already taking effect on 1 January 2026, together with other proposed measures currently under consideration, excise tax revenue is expected to continue increasing throughout fiscal year 2026. Businesses operating in industries subject to excise tax should closely monitor future policy developments, as upcoming regulatory changes may significantly affect tax costs and compliance obligations in Thailand.

Author: Panisa Suwanmatajarn, Managing Partner.

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U.S. Tariff Policy Shift Following Supreme Court Ruling: Thailand Monitors Impact and Prepares Strategic Response

U.S. Supreme Court Limits Presidential Authority to Impose Global Tariffs

On 20 February 2026, the Supreme Court of the United States issued a significant ruling in Learning Resources, Inc. v. Trump by a 6–3 majority. The Court held that the International Emergency Economic Powers Act (IEEPA) does not authorize the U.S. President to impose broad global import tariffs.

The Court reasoned that the imposition of tariffs constitutes a fiscal power that is constitutionally vested in the United States Congress rather than the executive branch.

As a consequence, the Court invalidated the Reciprocal Tariff measure previously implemented under IEEPA. The decision could potentially result in the refund of tariffs already collected, estimated at approximately USD 175 billion.

U.S. Introduces Temporary Global Tariff under Trade Act of 1974

Following the ruling, the U.S. President issued a proclamation on the same day invoking authority under Section 122 of the Trade Act of 1974 to impose a temporary import surcharge of 10% on goods imported from all countries for a period of 150 days, citing concerns related to balance-of-payments pressures.

The measure took effect on 24 February 2026. However, on 21 February 2026, the President announced an increase in the tariff rate to 15%, the maximum level permitted under Section 122, effective immediately.

This temporary tariff measure replaces the Reciprocal Tariff framework but includes exemptions for certain strategic goods, including:

  • Certain critical minerals
  • Metals used in currency and bullion
  • Energy and energy products
  • Certain agricultural products
  • Pharmaceuticals and pharmaceutical ingredients
  • Certain electronics
  • Passenger vehicles, certain light trucks, medium- and heavy-duty vehicles, buses, and related parts
  • Certain aerospace products

Potential Impact on Thailand

The Vice Chairman of the Thai Chamber of Commerce stated that the U.S. court decision does not disrupt the ongoing trade negotiations between Thailand and the United States. Instead, the ruling provides greater legal clarity regarding U.S. trade policy.

From a commercial perspective, the new tariff rate of 15% is lower than the effective tariff rate of approximately 19% previously faced by Thai exports. Consequently, the short-term impact on Thai exporters is expected to be manageable.

In addition, the temporary nature of the measure may create short-term export opportunities, as U.S. importers may accelerate purchases during the 150-day implementation period in anticipation of potential policy changes.

Nevertheless, Thailand may still need to address longstanding U.S. concerns in several areas, including:

  • Production cost structures
  • Government subsidies
  • Anti-dumping issues
  • Labour standards
  • Environmental standards
  • Food safety regulations
  • Intellectual property protection

These issues may become increasingly relevant in the context of future trade policy reviews.

Thai Government Response

The Prime Minister has instructed the Thailand–U.S. trade negotiation team, including the Deputy Prime Minister and Minister of Finance, together with the Minister of Commerce, to closely monitor developments following the transition from the Reciprocal Tariff framework to the 15% global tariff measure.

While the reduced tariff rate may provide short-term benefits for Thai exports, policymakers recognize the possibility of further U.S. trade measures and will continue to maintain close bilateral engagement.

Thailand’s Strategic Response

To mitigate potential risks and strengthen economic resilience, Thailand is pursuing several strategic initiatives.

1. Continued Engagement with U.S. Trade Authorities

Thailand will continue discussions with the Office of the United States Trade Representative (USTR) to safeguard Thai export interests and manage potential tariff risks.

2. Expansion of Free Trade Agreements (FTAs)

The government is accelerating negotiations on free trade agreements in order to diversify export markets and reinforce Thailand’s position as a regional trade and investment hub.

Current priorities include:

  • Implementation of FTAs with Sri Lanka and the European Free Trade Association (EFTA), which have already been signed and are awaiting domestic approval
  • Targeting the conclusion of FTA negotiations with South Korea and the European Union by 2026
  • Advancing trade cooperation between the Association of Southeast Asian Nations (ASEAN) and Canada

3. Support Measures for Businesses

The Ministry of Commerce has established a consultation centre to provide guidance to businesses affected by evolving global trade policies.

4. Investment Promotion and Supply Chain Relocation

Thailand is also working to remove regulatory barriers to investment in order to attract supply-chain relocation into Thailand and the broader ASEAN region.

The Prime Minister has tasked the Office of the Council of State of Thailand with accelerating legal reforms affecting investors, while the Thailand Board of Investment continues to expedite investment approvals under the Board of Investment (BOI) Fast Pass policy.

Author: Panisa Suwanmatajarn, Managing Partner.

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Partnerships and Limited Companies: Enhanced Measures to Prevent Nominee Arrangements Involving Foreigners

The Department of Business Development (DBD) has identified more than 75,000 companies operating in Thailand with foreign shareholders holding less than 50 percent of shares while engaging in restricted businesses under the schedules of the Foreign Business Act B.E. 2542 (1999) (“FBA”). Such structures may indicate the use of Thai nationals as nominees to conceal foreign ownership or control.

To strengthen the prevention of these arrangements, the DBD proposes the Draft Central Partnership and Company Registration Office Order No. .. / 2569 on Criteria and Procedures for Registration of Amendments to Include a Foreigner as a Partner of a Partnership or as an Authorized Signatory of a Limited Company (the “Draft Order”).

The Draft Order aims to prevent Thai nationals from providing assistance, support, or joint participation in business operations with foreign investors in a nominee capacity, which may constitute an offense under section 36 of the FBA.

Key Provisions of the Draft Order:

The Draft Order introduces mandatory in-person verification procedures for specific post-incorporation amendments to registered partnerships and limited companies, supplementing existing controls (such as three-month bank statement requirements for initial registrations involving foreign elements).

1.  Amendments to Partners of Registered Partnerships: For amendments to a registered partnership that originally had all Thai-national partners or previously had foreign partners contributing 50 percent or more of the capital, where the proposed change results in foreign partners collectively holding less than 50 percent of the capital, the Registrar requires:

      •  All existing partners and incoming Thai-national partners to appear in person before the Registrar.

      •  Presentation of valid national identification cards or equivalent photographic identification documents (unexpired).

      •  Recording of formal sworn statements confirming relevant details and denying nominee conduct.

2.  Amendments to Limited Companies: The Draft Order applies to limited companies where all existing authorized directors (with the power to bind the company) are Thai nationals. If an amendment seeks to appoint new directors, change the number or names of authorized directors, or otherwise result in a foreigner becoming an authorized director or co-signatory with binding authority, the Registrar requires:

      •  All existing directors and incoming Thai-national directors to appear in person.

      •  Presentation of valid identification as above.

      •  Recording of formal sworn statements affirming genuine participation and denying nominee arrangements.

3.  Exceptions to the Procedure:
In cases where full compliance is not feasible, the registration application may be accepted upon demonstration of reasonable grounds and receipt of written approval from designated senior officials, including the Head of the Business Registration and Trade Facilitation Group, the Director of the Central Business Registration Division, the Director of the Digital Juristic Person Registration System Promotion and Development Division, or the Director of a relevant Department of Business Development District Office.

Public Consultation and Expected Implementation:

The Draft Order is currently undergoing public consultation, commencing on 29 February 2026 and concluding on 13 March 2026. Following the consultation, submitted feedback will be reviewed, potential revisions made, and the order advanced toward finalization and promulgation. If adopted in its current or a similar form, implementation is tentatively anticipated around early April 2026 or shortly thereafter, subject to official confirmation.

Businesses and Individuals Potentially Affected:

The Draft Order may impact:

  • Limited companies and registered partnerships in Thailand.
  • Thai-national directors, partners, and incoming participants in relevant amendments.
  • Foreign investors or directors seeking involvement through shareholding below 50 percent or signatory authority.
  • Legal practitioners, corporate service providers, and other parties facilitating business registrations.
  • Entities with foreign investment or managerial involvement, particularly in restricted sectors, should review their structures and monitor developments to ensure future compliance.

Conclusion:

The Draft Order represents a targeted extension of the DBD’s intensified efforts to enforce foreign business restrictions and combat nominee practices. By requiring direct verification and sworn declarations from Thai participants. It aims to promote greater transparency and deter circumvention of the FBA. This measure complements—not replaces—prior registration safeguards and aligns with broader regulatory initiatives against illicit nominee structures observed since early 2026.

Stakeholders are advised to consult and seek professional legal advice to prepare for potential requirements once the Draft Order is finalized.

Author: Panisa Suwanmatajarn, Managing Partner.

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Update on Thailand–United States Tariff Negotiations and the New 15% Global Import Tariff

Update on Thailand–United States Tariff Negotiations

On 19 February 2026, the Minister of Commerce provided an update on Thailand’s ongoing tariff negotiations with the United States, confirming that discussions remain underway despite several substantive issues on which the parties continue to hold differing positions.

Earlier, on 12 February 2026, Director-General-level consultations were convened to discuss the proposed timeline and structural framework of the contemplated agreement. Both sides reaffirmed their shared objective of concluding the negotiations in a timely and orderly manner. The United States indicated that it would not object to Thailand submitting, in advance, a proposed list of goods for exemption from the Reciprocal Tariff (“RT”) under Annex 3. However, approval of any such exemptions will ultimately depend on the overall balance and final outcome of the negotiations. The Ministry of Commerce has expressed its intention to conclude the negotiations by July 2026.

Thailand’s Tariff Position within ASEAN and Structural Parity under the RT Regime

Thailand currently maintains a tariff position equivalent to that of other ASEAN Member States under the RT framework and is therefore not at a structural disadvantage from a comparative tariff perspective.

Eligibility for exemptions under Annex 3 will depend on the specific terms secured through each country’s bilateral negotiations with the United States, as the United States applies differentiated conditions on a case-by-case basis. Importantly, any preferential treatment granted under Annex 3 does not take effect automatically upon the conclusion of negotiations. Rather, it remains subject to compliance with applicable domestic legal processes and formal procedural requirements.

By way of illustration, in the case of Malaysia, tariff exemptions become operative only after sixty (60) days have elapsed from the date on which the relevant agreement enters into force under Malaysia’s domestic law, together with formal notification to the United States. During this interim period, goods listed under Annex 3 remain subject to the RT in the ordinary course until all requisite procedures have been completed and the exemption becomes fully effective.

U.S. Supreme Court Ruling on Presidential Authority under IEEPA

On 20 February 2026, the Supreme Court of the United States, by a 6–3 majority, affirmed a lower court ruling that the U.S. President’s reliance on the International Emergency Economic Powers Act (“IEEPA”) as authority to impose the RT was unlawful. The Court held that IEEPA does not authorize the imposition of tariffs, as such authority is constitutionally vested in Congress.

This decision clarified the constitutional allocation of tariff authority and directly affected the legal basis underpinning the previously imposed RT measures.

Imposition of a Global Tariff under Section 122 of the Trade Act of 1974

Following the Supreme Court’s ruling, on 21 February 2026, the U.S. President announced the immediate imposition of a 15% global import tariff pursuant to Section 122 of the Trade Act of 1974.

The Minister of Commerce confirmed that Thailand is not required to reopen or renegotiate its ongoing discussions in light of this measure, as the tariff rate has been unilaterally determined by the United States. Certain categories of goods remain exempt, and the overall impact has not been assessed as materially adverse.

In the short term, Thailand may derive relative benefits from this development. The previously applicable tariff rate of 19% on Thai goods has been reduced to 15%, resulting in immediate cost savings for Thai exporters. Key sectors expected to benefit include rubber products, frozen seafood, and electronic components—each representing significant export categories to the United States market.

Ongoing Monitoring and the 150-Day Statutory Review Period

Notwithstanding the foregoing, the Thai Government will continue to monitor the implementation and legal trajectory of the measure, particularly in light of the 150-day period prescribed under Section 122 of the Trade Act of 1974. During this statutory period, the United States retains the authority to modify, extend, or terminate the measure.

Benefits and Risks Arising from the U.S. Tariff Measures

Short-Term Benefits


The reduction of the import tariff rate from 19% to 15% enhances the price competitiveness of Thai goods in the United States market and provides immediate cost relief to Thai exporters.

No Requirement for Renegotiation


As the United States has unilaterally determined the applicable tariff rate and granted exemptions for certain categories of goods, Thailand is not required to reopen negotiations, thereby reducing the administrative and diplomatic burden associated with prolonged discussions.

Opportunity for Market Expansion


Thai exporters may capitalize on the current tariff environment by accelerating exports during this period of reduced rates, ahead of any potential regulatory changes.

Long-Term Risks


If the United States increases tariff rates or introduces additional trade measures following the statutory review period, Thailand may face renewed competitive pressure. It is therefore prudent to prepare contingency strategies, including diversification of export destinations, particularly within ASEAN and the European market.

Conclusion

Recent developments in U.S. tariff policy reflect continued legal and policy volatility—from the Supreme Court’s clarification of presidential authority under IEEPA to the subsequent imposition of a 15% global import tariff under Section 122 of the Trade Act of 1974.

While Thailand is not required to renegotiate its position and stands to benefit in the short term from the reduced tariff rate, the uncertainty inherent in the 150-day statutory framework remains a material risk factor. Accordingly, the Thai Government should closely monitor further developments in U.S. trade policy, while private sector stakeholders strategically leverage the current window of opportunity to expand exports, enhance product value, and diversify market exposure in order to strengthen Thailand’s long-term trade resilience.

Author: Panisa Suwanmatajarn, Managing Partner.

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US Special 301: Thailand’s Continued Watch List Status and Strategic Efforts Toward Removal

The Office of the United States Trade Representative (“USTR”) annually publishes the Special 301 Report to evaluate the adequacy and effectiveness of intellectual property (“IP”) protection and enforcement in U.S. trading partners, pursuant to Section 301 of the U.S. Trade Act of 1974. On 29 April 2025, the 2025 Special 301 Report was released, maintaining Thailand’s placement on the Watch List—a designation Thailand has held since 2017, following a period on the Priority Watch List from 2007 to 2016.

While the Watch List status remained unchanged, the USTR acknowledged Thailand’s notable progress in several areas, including legislative initiatives and enhanced enforcement activities. Key advancements recognized include the publication of a draft Patent Act in December 2024 to streamline patent registration, reduce examination backlogs, and facilitate accession to the Hague Agreement Concerning the International Registration of Industrial Designs; proposed amendments to the Copyright Act to support accession to the WIPO Performances and Phonograms Treaty (“WPPT”); and strengthened enforcement measures against IP infringements, coordinated by the Department of Intellectual Property, the Royal Thai Police, and the Customs Department, resulting in increased seizures of counterfeit and pirated goods.

On 26 August 2025, the National Intellectual Property Policy Committee approved the Thailand Intellectual Property Work Plan (“IP Work Plan”), developed in collaboration with the USTR. This plan outlines concrete, time-bound measures to address the deficiencies identified in the 2025 Report and supports Thailand’s objective of removal from the Watch List. Complementing this, the Intellectual Property Development Plan for 2026–2027 was formalized, structured around four core pillars:

1.  Legislative Development: Updating and modernizing IP laws to align with international best practices.

2.  Enforcement Enhancement: Improving inter-agency coordination, implementing robust measures, and imposing stricter penalties to combat infringement.

3.  Public Service Optimization: Enhancing the efficiency and accessibility of IP registration, examination, and related administrative processes.

4.  Stakeholder Engagement and Awareness: Increasing public awareness and fostering a culture of respect for IP rights through education and participation.

These efforts are further supported by strategic initiatives aimed at elevating Thailand’s performance in the Global Innovation Index, including increased investment in research and innovation, development of financial mechanisms for innovation, promotion of innovation scaling, cultivation of skilled talent, and improved data management for innovation activities.

On 3 February 2026, the Thai Cabinet formally acknowledged Thailand’s status under the 2025 Special 301 Report, as presented by the Ministry of Commerce. This acknowledgment reaffirms the government’s commitment to implementing the IP Work Plan and advancing reforms in close coordination with the USTR. The focus has shifted from policy formulation to measurable implementation and enforcement outcomes.

The forthcoming 2026 Special 301 Report, anticipated at the end of April 2026, will evaluate the effectiveness and sustainability of these measures. Successful execution of the IP Work Plan is expected to demonstrate sufficient progress to warrant removal from the Watch List, thereby strengthening bilateral trade relations with the United States and enhancing protections for domestic and international IP holders.

For a detailed analysis of Thailand’s status in the 2025 Special 301 Report and initial reform strategies, please refer to our previous article: [Thailand’s 2025 Special 301 Report on Intellectual Property Protection and Enforcement Released (Thailand’s 2025 Special 301 Report on Intellectual Property Protection and Enforcement Released – The Legal Co., Ltd.).

Key Takeaways:

  1. Thailand remains on the U.S. Watch List in the 2025 Special 301 Report, reflecting ongoing concerns despite recognized progress in IP protection and enforcement.
  2. The jointly developed Thailand Intellectual Property Work Plan, approved in August 2025, and the Intellectual Property Development Plan for 2026–2027 provide a structured framework to address USTR-identified deficiencies through legislative, enforcement, service, and awareness initiatives.
  3. Cabinet acknowledgment on 3 February 2026 underscores Thailand’s commitment to implementation, with the 2026 Special 301 Report serving as a pivotal assessment of these efforts.
  4. Effective execution holds the potential to secure removal from the Watch List, bolster international trade confidence, and support innovation, particularly for small and medium enterprises.

Related Article: Thailand’s 2025 Special 301 Report on Intellectual Property Protection and Enforcement Released – The Legal Co., Ltd.

Author: Panisa Suwanmatajarn, Managing Partner.

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Power Development Plan: 2026 Plan Advances Alignment with Net-Zero Emissions by 2050

The Energy Policy and Planning Office (EPPO) is advancing the preparation of Thailand’s Power Development Plan for the period 2026–2050, designated as PDP 2026. This revision aims to secure reliable electricity supply over the long term      while ensuring full consistency with the nation’s accelerated commitment to achieving net-zero greenhouse gas emissions by 2050.

The Power Development Plan functions as Thailand’s authoritative strategic framework governing electricity generation, transmission infrastructure, and overall system reliability across an extended multi-decade period. It undergoes regular review to incorporate changes in economic projections, technological progress, energy security imperatives, environmental priorities, and evolving demand profiles. The forthcoming edition extends the horizon to 25 years and establishes a markedly more stringent emissions trajectory than prior iterations.

Principal Elements of PDP 2026:

•  Extended timeframe and accelerated climate target
The planning period covers 2026–2050, with the net-zero greenhouse gas emissions objective shifted forward from 2026 to 2050, aligning with prevailing international climate obligations.

•  Elevated renewable energy integration
The plan seeks a clean energy proportion surpassing 50% of total generation, emphasizing utility-scale solar photovoltaic systems, onshore and offshore wind capacity, and floating solar arrays on reservoirs operated by the Electricity Generating Authority of Thailand (EGAT). Technical potential for these renewable resources is assessed at 5,000–10,000 MW.

•  Upgraded reliability framework
Adoption of the Loss of Load Expectation (LOLE) standard, a globally accepted benchmark, restricts anticipated unserved energy to no more than 0.7 days per year (approximately 16 hours annually), preserving supply stability in the presence of variable renewables and increasing load requirements.

•  Anticipation of demand-side transformations
Forecasts integrate heightened electricity consumption arising from data centers, artificial intelligence infrastructure, rapid electric vehicle penetration, and volatility in international energy markets.

•  Assessment of advanced low-carbon solutions
The framework examines the prospective contributions of small modular reactors (SMRs) and carbon capture and storage (CCS) technologies as viable complements to support decarbonization while maintaining system firmness.

•  Economic and operational coherence
Projections rest on an assumed average annual GDP growth of 2.5–2.6%, with EGAT’s mandate adjusted to guarantee enduring system security.

Key Takeaways:

•  PDP 2026 signals a fundamental reorientation toward a renewables-led electricity system, channeling investment into solar, wind, battery storage, transmission reinforcement, and intelligent grid technologies, while constraining opportunities for additional coal and inflexible natural gas capacity.

•  Realization of the plan’s ambitions demands significant front-loaded capital allocation to infrastructure and flexibility assets to comply with the LOLE reliability threshold amid intermittent renewable output and demand escalation.

•  The transition promises sustained cost efficiencies and environmental benefits, including enhanced air quality, though it introduces short-term pressures such as tariff adjustments, reliance on global supply chains for storage and renewable components, and structured reskilling initiatives for communities linked to fossil fuel activities.

•  Effective execution will require prompt advancement in procurement procedures, market restructuring, transmission development, and dedicated just-transition policies to achieve a resilient, cost-competitive, and inclusive power sector in support of Thailand’s 2050 net-zero objective.

Author: Panisa Suwanmatajarn, Managing Partner.

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Corporate Income Tax Exemption for Investment in Large Commercial Electric Vehicles in Thailand

On 9 September 2025, the Royal Gazette published the Royal Decree issued under the Revenue Code regarding the Corporate Income Tax Exemption for Income (No. 798) B.E. 2568 (2025) (“Royal Decree No. 798”), introducing a new corporate income tax (“CIT”) incentive to encourage investment in large commercial electric vehicles (“Large EVs”).

This incentive forms part of Thailand’s broader policy to accelerate the transition to zero-emission transportation, reduce greenhouse gas emissions from the commercial transport sector, and strengthen the domestic electric vehicle ecosystem. The incentive took effect on 10 September 2025.

Under this scheme, companies and juristic partnerships (“Eligible Taxpayers”) may claim additional CIT deductions (in addition to normal depreciation) for investments in qualifying Large EVs, subject to compliance with all statutory, technical, and procedural requirements.

Key Legal Framework

The incentive is implemented under the following key regulations:

  • Royal Decree No. 798, which establishes the overall framework for the tax incentive; and
  • Notification of the Director-General of the Revenue Department on Income Tax (No. 464) B.E. 2568 (2025) (“Notification of the Director-General No. 464”), which prescribes detailed eligibility conditions, deduction rates, and procedural requirements.

The principal eligibility requirements and applicable tax benefits under these regulations are summarized below.

Eligibility Requirements for the CIT Incentive

Eligible Taxpayers may claim additional CIT deductions for investments in Large EVs only where all of the following conditions are satisfied.

1. Qualifying Investment Period

The investment must be incurred during the period from 27 March 2025 to 31 December 2025.

2. Qualifying Large EVs

The investment must relate to Large EVs that meet all of the following requirements.

(a) Vehicle Type

  • Electric passenger vehicles, duly registered under the Motor Vehicle Act B.E. 2522 (1979) (“Motor Vehicle Act”), and operated for passenger transport in accordance with the standards prescribed under the Land Transport Act B.E. 2522 (1979) (“Land Transport Act”), including:
    • standard 1 (special air-conditioned buses),
    • standard 2 (air-conditioned buses),
    • standard 3 (non-air-conditioned buses),
    • standard 4 (double-decker buses),
    • standard 6 (semi-trailer buses), and
    • standard 7 (special-purpose passenger buses).
  • Electric trucks, duly registered under the Motor Vehicle Act, and operated for the transport of animals or goods in accordance with the characteristics prescribed under the Land Transport Act, including:
    • type 1 (pickup trucks),
    • type 2 (van trucks),
    • type 3 (tanker trucks),
    • type 4 (hazardous material trucks),
    • type 5 (special-purpose trucks), and
    • type 9 (tractor trucks).

(b) Asset Conditions

  • The vehicles must be new and unused;
  • Eligible for depreciation or amortization for tax purposes; and
  • Acquired and ready for use by 31 December 2025.

(c) No Overlapping Tax Incentives

  • The vehicles must not receive tax benefits under other laws; and
  • Must not be used in businesses that enjoy CIT exemptions under the Investment Promotion Act B.E. 2520 (1977), the Competitiveness Enhancement for Targeted Industries Act B.E.2560 (2017), or the Eastern Economic Corridor Act B.E. 2561 (2018).

Applicable CIT Deduction Rate

Where all of the above eligibility requirements are met, Eligible Taxpayers may claim additional CIT deductions calculated as follows:

  • 100% of the actual cost for Large EVs manufactured or assembled in Thailand, or
  • 50% of the actual cost for imported Large EVs.

Key Benefits and Limitations

Benefits

  • Meaningful tax savings, particularly for domestically manufactured or assembled Large EVs;
  • Reduced after-tax investment costs, improving project feasibility and capital efficiency; and
  • Alignment with ESG and sustainability objectives, which are increasingly important in corporate decision-making.

Limitations

  • A limited investment window, requiring timely procurement and deployment;
  • Strict eligibility and documentation requirements, with potential tax clawback risks; and
  • Incompatibility with other CIT incentive regimes, limiting flexibility for BOI-promoted or EEC-based businesses.

Conclusion

The Large EV CIT incentive is a targeted tax measure introduced to support Thailand’s transition to zero-emission commercial transportation while encouraging investment in large commercial electric vehicles. Under Royal Decree No. 798 and Notification of the Director-General No. 464, Eligible Taxpayers may claim additional CIT deductions for investments in qualifying Large EVs made within the prescribed investment period, subject to compliance with all eligibility and procedural requirements.

The incentive provides enhanced deductions of up to 100% of the investment cost for domestically manufactured or assembled Large EVs and 50% for imported vehicles. However, the benefit is subject to strict conditions, including vehicle type and usage requirements, asset characteristics, the prohibition of overlapping tax incentives, and compliance with documentation obligations. Accordingly, careful planning and coordination among tax, legal, and operational teams are essential to secure the incentive and avoid potential tax adjustments.

Author: Panisa Suwanmatajarn, Managing Partner.

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Legal Update: Recent Revisions to the United States–Thailand Joint Statement on Reciprocal Trade

The Joint Statement on the Framework for the United States–Thailand Agreement on Reciprocal Trade (the “Joint Statement“) has been revised in certain non-material respects, as proposed by the Ministry of Commerce of Thailand. Such revisions were made pursuant to authority previously granted by the Cabinet and do not alter the core principles approved at the policy level.

Cabinet Approval and Delegated Authority

The Cabinet of Thailand (the “Cabinet“) initially approved the Joint Statement on 1 August 2025 (B.E. 2568). Concurrently, the Cabinet delegated authority to the Ministry of Commerce to make revisions to non-essential provisions of the Joint Statement, provided that such revisions remain consistent with the principles approved by the Cabinet. The Ministry of Commerce was further required to subsequently report such revisions to the Cabinet, together with the rationale for and benefits arising from them.

Modifications Proposed by the United States

Following further discussions, the United States proposed several revisions to both the substance and wording of the Joint Statement to more accurately reflect prevailing factual circumstances and the current status of implementation. The key modifications are summarized below:

  • The reciprocal trade tariff, which had not previously been specified, was fixed at a rate of 19 percent.
  • The Joint Statement was revised to include a reference to Annex III of Executive Order No. 14346, dated 5 September 2025 (B.E. 2568), entitled “Potential Tariff Adjustments for Aligned Partners.” This annex addresses the identification of categories of goods that may be eligible for tariff exemptions for trading partners that successfully conclude negotiations with the United States. The inclusion of this reference enhances legal clarity, as the original text did not expressly refer to the relevant executive order.
  • Provisions relating to rules of origin were removed. This issue remains under consideration by the United States, and no definitive policy or implementation framework has yet been finalized.
  • Certain wording in the Joint Statement was refined to more accurately reflect the status and progression of negotiations between Thailand and the United States.

Thailand’s Representation and Formalization of the Joint Statement

The Prime Minister of Thailand appointed the Deputy Prime Minister as the representative of the Thai Government to engage in discussions with the United States regarding the Joint Statement through a conference meeting. During these discussions, Thailand formally confirmed the revised Joint Statement.

Subsequently, the United States publicly released the Joint Statement on the White House website during the 47th ASEAN Summit held in Kuala Lumpur, Malaysia, on 26 October 2025, which was attended by the President of the United States.

Consideration by the Ministry of Commerce

The Ministry of Commerce concluded that the revisions proposed by the United States constituted non-material adjustments to the Joint Statement. Such revisions were intended to enhance clarity and ensure consistency with prevailing factual circumstances and international practice and did not conflict with the principles previously approved by the Cabinet.

Key Takeaways

Thailand is expected to derive substantial benefits from the reduction of the reciprocal tariff from 36 percent to 19 percent, particularly in light of Thailand’s export value to the United States, which exceeds USD 56 billion.

The reciprocal tariff rate was fixed at 19 percent, a level broadly comparable to those applied to other ASEAN countries.

Author: Panisa Suwanmatajarn, Managing Partner.

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Strengthening Control over Illegal Foreign Employment in Thailand

Current Situation

Thailand continues to face significant challenges related to illegal migration and the unauthorized employment of foreign nationals. A substantial number of foreign nationals are estimated to have entered or remained in the Kingdom without valid immigration status or lawful work authorization, particularly in border areas. This situation raises serious concerns regarding national security, labor market integrity, and the protection of Thai workers’ rights.

In response, the Thai Government has reaffirmed its commitment to strict enforcement against illegal foreign employment. Relevant security agencies have been instructed to coordinate closely with provincial employment offices, especially in border provinces, to enhance surveillance, inspections, and preventive measures. Authorities have also been directed to conduct rigorous workplace inspections to ensure full compliance with applicable labor laws.

Legal Framework Governing Foreign Employment in Thailand

Under Thai law, foreign nationals must hold a valid work permit and perform only the work expressly authorized under that permit. Any violation of these requirements exposes both foreign workers and employers to significant legal penalties.

Liability of Foreign Workers

A foreign national who works in Thailand without a valid work permit, or who performs work beyond the permitted scope, is subject to:

  • A fine of THB 5,000 to THB 50,000;
  • Deportation to the country of origin; and
  • A two-year prohibition on applying for a new work permit from the date of punishment.

Liability of Employers and Business Owners

Employers or business owners who employ foreign nationals without a valid work permit, or permit foreign workers to perform work outside the permitted scope, shall be subject to:

  • A fine of THB 10,000 to THB 100,000 per foreign worker.

Enhanced Penalties for Repeat Offenses

In the event of repeat violations by employers, enhanced penalties apply, including:

  • Imprisonment for a term not exceeding one year; or
  • A fine of THB 50,000 to THB 200,000 per foreign worker; or
  • Both imprisonment and fine; and
  • A three-year prohibition on employing foreign workers.

Potential Impacts

Increased Legal Exposure for Foreign Nationals: Stricter inspections are likely to result in increased enforcement actions, including fines, deportation, and a two-year prohibition on obtaining a new work permit.

Heightened Compliance Obligations for Employers: Employers face greater legal and financial exposure, as fines are imposed on a per-worker basis, and repeat offenses may result in imprisonment, increased fines, and a three-year ban on employing foreign nationals.

Market and Workforce Implications: Industries that rely heavily on migrant labor may experience short-term labor shortages and higher compliance-related costs.

Strengthened Regulatory Enforcement and National Security: Enhanced coordination between security agencies and employment authorities is expected to improve enforcement efficiency, deter illegal employment, and promote standardized employment practices aimed at protecting Thai workers’ rights.

Conclusion

These measures are expected to strengthen the prevention and suppression of illegal foreign employment and promote greater legal compliance among employers. In the short term, businesses that rely heavily on foreign labor may face operational challenges, including labor shortages and increased compliance costs. In the long term, however, these measures are intended to enhance the protection of Thai workers’ rights and establish standardized employment practices consistent with internationally recognized labor standards.

Author: Panisa Suwanmatajarn, Managing Partner.

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White Collar Crime: Systematic Manipulation and Fraud in the Stock Case

A coordinated group of 42 individuals executed a sophisticated scheme to manipulate trading in shares of a listed company, causing significant losses to brokerage firms and eroding confidence in Thailand’s capital market. The Civil Court adjudicated the civil aspects under case numbers black F.11/2566 and red F.121/2568, concluding that the conduct amounted to joint fraud, operation as an unlawful association (analogous to a criminal syndicate), and market manipulation contrary to the Securities and Exchange Act B.E. 2535.

The group was structured into three subgroups: planners who devised the strategy, supporters who submitted buy orders via automated trading programs (BOT), and account holders who supplied login credentials (username and password) in exchange for a share of profits, typically allocated on a 70:30 basis. To obscure their involvement and circumvent regulatory reporting thresholds, the perpetrators employed Non-Voting Depository Receipts (NVDR)—a mechanism that allows foreign investors to hold economic exposure to Thai listed shares without direct ownership or voting rights—and dispersed orders simultaneously across multiple brokerage firms.

A decisive piece of evidence was the discovery that, despite the dispersal, all buy orders originated from the same IP address, demonstrating centralized control from a single computer or location. This technical linkage, combined with traceable financial flows showing profit-sharing transfers, established the concerted nature of the enterprise.

The scheme culminated on November 10, 2022, with the placement of At-The-Open (ATO) buy orders at 2.90 baht per share for approximately 1.532 billion shares, representing a value of more than 4.4 billion baht—over ten times the average daily trading volume in the preceding 30 days. These transactions utilized cash accounts, which permit settlement two business days later (T+2). When payment became due, the perpetrators deliberately defaulted, obliging the brokerage firms, acting as intermediaries, to cover the obligations to the clearing house in accordance with Stock Exchange of Thailand rules. The resulting aggregate loss to the brokerages reached approximately 4.5 billion baht.

The Anti-Money Laundering Office froze 36 related asset items valued at approximately 5.34 billion baht (including accrued interest) to prevent dissipation during legal proceedings.

The Civil Court divided the proceedings into three main categories:

•  Fraud: The court ordered restitution or compensation to 10–11 affected brokerage firms totaling approximately 4.5 billion baht and directed the forfeiture of approximately 1.5 billion shares to the state.

•  Unlawful association: Additional restitution of around 129 million baht to the brokerage firms.

•  Market manipulation: Civil penalties of approximately 226 million baht, payable to the state.

Separate criminal prosecutions remain ongoing, with indictments issued against multiple defendants and further investigative actions continuing as of early 2026.

Key Takeaways:

•  Deliberate exploitation of automated trading systems, deferred settlement rules, NVDR structures, and multi-brokerage order dispersal can inflict severe systemic damage on securities markets.

•  Unified technical indicators—such as a common IP address—and linked financial transactions remain essential in proving conspiracy notwithstanding attempts at concealment.

•  Effective inter-agency collaboration among investigative authorities, anti-money laundering offices, and market regulators is critical for asset preservation, victim compensation, and deterrence.

•  The incident underscores the necessity of heightened surveillance over high-volume automated orders, cross-brokerage patterns, proxy account usage, and NVDR transactions to protect market integrity and sustain investor confidence.

Related Article: White-Collar Crime: A Comprehensive Analysis of Characteristics, Investigation Techniques, and the Critical Role of Computer Forensics – The Legal Co., Ltd.

Author: Panisa Suwanmatajarn, Managing Partner.

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