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Tax Obligations and Compliance for Foreign Residents in Thailand

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

Tax Residency and Taxable Income in Thailand:

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

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

Tax Return Filing Requirements:

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

Deductions and Allowances:

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

Double Taxation Agreements (DTAs) and Tax Credits:

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

Penalties for Non-Compliance:

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

Conclusion:

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

Author: Panisa Suwanmatajarn, Managing Partner.

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Tax Court Digital Integration and Streamlined Procedures:

Thailand’s tax administration system has undergone significant enhancements to improve efficiency, accessibility, and alignment with modern technological standards. On October 14, 2025, the Royal Gazette published two critical documents: the “Requirements for Tax Cases B.E. 2568 (2025)” issued by the Director-General of the Revenue Department, and the “Act on the Establishment of the Tax Court and Procedures for Tax Cases (No. 3) B.E. 2568 (2025)”. These updates reflect a strategic move toward digital integration and streamlined judicial processes within the tax court framework. This article provides a detailed analysis of these developments, drawing from the provided documents, and outlines their implications for stakeholders.

Overview of the Third Amendment to the Tax Court Act:

The original Act on the Establishment of the Tax Court and Procedures for Tax Cases, enacted in B.E. 2528 (1985), established a specialized judicial body to adjudicate tax disputes with expertise distinct from general courts. The third amendment, effective from its publication on October 14, 2025, introduces procedural refinements to accommodate technological advancements and enhance operational efficiency.

A notable provision is the authorization of video conferencing for court hearings, enabling remote participation while maintaining procedural integrity. This is particularly evident in sections addressing case management and evidence presentation, where electronic submissions—such as appeals and supporting documents—are now formally recognized. The amendment also emphasizes pre-trial procedures, including mediation and settlement discussions, to alleviate case backlogs and encourage resolutions outside formal litigation.

Additionally, the amendment reinforces taxpayer protections by establishing clearer appeal timelines and enhancing transparency in judicial decisions. It mandates adherence to digital evidence standards, ensuring compliance with data protection regulations. These modifications aim to make the tax court more accessible to remote and international taxpayers while preserving judicial fairness and efficiency.

Key Requirements for Tax Cases in B.E. 2568 (2025):

The “Requirements for Tax Cases B.E. 2568 (2025)” complements the amended Act by providing operational guidelines for tax dispute resolution in the fiscal year 2025. This document, spanning multiple sections, details procedural steps, technological specifications, and compliance mandates.

A significant feature is the incorporation of digital tools. Section 19, for instance, permits video conferencing for court sessions, contingent upon meeting technical requirements such as secure connections and participant identity verification. This provision facilitates participation without physical presence, benefiting cases with international dimensions or during periods of restricted access.

Filing and appeal processes have been modernized. Sections 7 through 10 mandate electronic filing of tax assessment appeals via designated platforms, requiring digital signatures. Appeals must be submitted within 30 days of an assessment notice, with extensions granted under exceptional circumstances. Evidence submission protocols prioritize digital formats, including scanned documents and electronic records, to accelerate case reviews.

The requirements also categorize cases based on complexity, allowing simpler disputes to proceed through accelerated mediation. Sections 13 and 14 outline evidence examination procedures, including the use of expert witnesses and digital audits. High-value cases require additional oversight, such as mandatory pre-hearing conferences to define key issues.

Compliance with these guidelines is obligatory for all parties, including revenue officers and taxpayers. Failure to adhere to specified digital formats may lead to procedural delays or case dismissals. The document further includes provisions for training and support to ensure stakeholder readiness for the new system.

Implications for Stakeholders:

These developments signify a transition to a digitized and efficient tax dispute resolution system in Thailand. Taxpayers benefit from reduced logistical burdens through remote participation options, potentially lowering associated costs. Legal practitioners must enhance their technical proficiency to meet submission standards. Revenue authorities gain from expedited processes, which may improve tax law enforcement and reduce adjudication timelines.

The alignment with digital public service initiatives reflects a commitment to transparency and modernity in Thailand’s tax administration.

Key Takeaways:

•  Digital Integration: Video conferencing and electronic filings are now integral, enhancing accessibility and operational efficiency.

•  Streamlined Procedures: Defined timelines and mediation options aim to reduce case backlogs and promote settlements.

•  Compliance Mandate: Strict adherence to digital standards is required, with non-compliance risking delays or penalties.

•  Effective Date: The amendment, requirements, and notification took effect on October 14, 2025, applying to tax cases in B.E. 2568 (2025).

Author: Panisa Suwanmatajarn, Managing Partner.

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Excise Department Issues Draft Regulation on Compulsory Collection of Tax Arrears

The Excise Department has issued the Draft Regulation of the Excise Department Regarding the Practice of Compulsory Payment of Tax Arrears by Confiscation, Suspension, and Auction of Assets (No. ..) B.E. …. (the “Draft Regulation”), which is open for public consultation from 1 October 2025 to 15 October 2025.

Purpose of the Regulation

Under the existing Excise Department Regulation B.E. 2560 (2017) (the “Current Regulation“), enforcement mechanisms apply only to excise tax arrears assessed by officials under the Excise Tax Acts of 1984 and 2017. Notably, this excludes excise tax on imported goods assessed by the Customs Department, creating gaps in enforcement authority and procedural inconsistencies between the two departments.

To address these issues, the Excise Department has issued this Draft Regulation to establish a unified enforcement framework for tax arrears, improve transparency, and enhance coordination between the Excise and Customs Departments.

Key Amendments

The Draft Regulation introduces several significant amendments to strengthen the collection and enforcement of excise tax arrears:

  • Expanded Definition of Tax Arrears and Taxpayers in Arrears – Broadens the scope to include both excise tax under the Excise Tax Act B.E. 2560 (2017) or the Excise Tax Act B.E. 2527 (1984), as well as excise tax assessed under the Customs Act B.E. 2560 (2017).
  • Clarified Enforcement Authority – Empowers officers to issue orders for seizure, suspension, and auction of property in cases involving excise tax arrears under the Customs Act B.E. 2560 (2017), ensuring greater procedural clarity.
  • Standardized Collection Procedures – Establishes transparent, step-by-step processes for the expedited collection and enforcement of tax arrears, promoting consistency and efficiency in practice.

Applicable Stakeholders

The Draft Regulation directly applies to importers liable for excise tax and customs tax who fail to remit payment within the prescribed period.

Conclusion

This Draft Regulation enhances the clarity, consistency, and efficiency of tax enforcement while safeguarding taxpayer rights. Applicable stakeholders should closely monitor the public consultation’s result and prepare for compliance with the new framework once finalized.

Author: Panisa Suwanmatajarn, Managing Partner.

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Amendment to Alcoholic Beverages Control Act – Key Provisions and Enhancements

Thailand has enacted the Alcoholic Beverages Control Act (No. 2) B.E. 2568 (2025) (“Act”), published in the Royal Gazette on 9 September 2025. This legislation introduces a comprehensive framework to regulate alcoholic beverages, focusing on public health while addressing modern market dynamics. It refines definitions, strengthens advertising controls, and updates enforcement mechanisms to align with contemporary social, technological, and economic conditions. This article outlines the key provisions of the Act, emphasizing definitions, marketing communications, and highlighting its advancements over the initial proposed draft.

Key Provisions of the Act

  1. Definition of “Alcoholic Beverages”
This Act provides a broad and precise definition of “alcoholic beverages,” encompassing traditional products like beer, liquor, wine, and spirits, as well as modern categories such as ready-to-drink beverages, low-alcoholic beverages, and other innovative alcoholic products anticipated in the future. This inclusive definition ensures regulatory coverage of emerging market trends. Beverages with an alcohol content of less than 0.5%, along with herbs, medicines, and drugs, are explicitly excluded to focus regulation on recreational consumption. Comparing to the initial proposed draft amendment, it aimed to clarify the term “alcoholic beverages”, but did not explicitly address newer categories like ready-to-drink or low-alcoholic beverages. This Act, on the other hand, expands this definition to anticipate market innovations and strengthening regulatory oversight.

2.  Definition of “Marketing Communications”
This Act defines “marketing communications” comprehensively, covering all activities that promote sales, services, or brand images. This includes advertising, public relations, promotions, product displays, sponsorships, and direct marketing, with a particular focus on digital and online platforms. The legislation strictly prohibits any marketing activities that encourage alcohol consumption, including the use of brand names or logos to sponsor events or promote consuming. Comparing to the initial proposed draft amendment, it defined “marketing communications” and restricted advertising that promotes alcohol consumption. This Act enhances this by explicitly including digital marketing and online platforms, addressing the rise of social media and e-commerce in alcoholic beverage promotion.

3.  Prohibition on Advertising and Promotional Activities
This Act bans all forms of advertising, public relations, sponsorships, or online marketing that encourage alcoholic beverage consumption. Only informational or educational messages that benefit society, as approved by the Minister of Public Health under the Alcoholic Beverage Control Committee’s recommendation, are permitted. This ensures that promotional activities do not undermine public health objectives.
Comparing to the initial proposed draft amendment,it prohibited advertising that glorifies alcohol but was less explicit about digital channels and sponsorships. The Act strengthens this by comprehensively banning all promotional activities, including online marketing, closing potential loopholes.

4.  Penalties and Enforcement
This Act establishes penalties to ensure compliance, calibrated to current economic and social contexts. For example, consuming alcoholic beverages in restricted zones incurs a fine of up to 5,000 THB (Section 39/1), while other violations may result in fines up to 30,000 THB (Section 39/2). Manufacturers or importers violating regulations face fines up to 500,000 THB (Section 33). These penalties enhance the Act’s enforceability and deterrent effect.
Comparing to the initial proposed draft amendment, the initial proposed draft amendment introduced penalties for consumption in sales areas and increased fines for production or importation offenses. The Act refines these penalties to align with current conditions, ensuring they are proportionate and effective.

5.  Expanded Responsibilities and Rehabilitation Measures
This Act assigns broader responsibilities to the National Alcohol Policy Committee and the Alcoholic Beverage Control Committee to set policies and control measures. It also emphasizes treatment and rehabilitation for individuals with alcohol-related issues, involving agencies such as the Department of Disease Control and the National Health Security Office to support structured rehabilitation programs.
Comparing to the initial proposed draft amendment, the proposed draft amendment outlined similar responsibilities and rehabilitation measures, and the Act implements these without significant changes, maintaining a balanced approach between enforcement and public health support.

Key Differences Between the Initial Proposed Draft and the Act

•  Scope of Definitions: The initial proposed draft clarified “alcoholic beverages”,  but did not explicitly include modern product categories. This Act broadens this definition to cover ready-to-drink and low-alcohol beverages, ensuring adaptability to market trends.

•  Digital Marketing Focus: This Act explicitly regulates online and digital marketing, a critical update not emphasized in the proposed draft, reflecting the growing influence of digital platforms.

•  Penalty Adjustments: This Act refines penalties to better align with current economic and social realities, enhancing deterrence compared to the proposed draft’s initial framework.

•  Comprehensive Advertising Ban: This Act strengthens the advertising ban by explicitly covering sponsorships and online marketing, addressing gaps in the proposed initial draft.

Implications and Conclusion

This Act represents a robust framework for regulating alcoholic beverages in Thailand, balancing public health with economic considerations. By refining definitions, particularly for “alcoholic beverages” and “marketing communications,” and addressing modern marketing practices, to ensure comprehensive regulatory coverage. The focus on digital platforms and stricter advertising bans makes it relevant to today’s marketing landscape, while updated penalties enhance enforcement. Stakeholders, including manufacturers, importers, and businesses, must adapt by reviewing marketing strategies, ensuring compliance with advertising restrictions, and investing in responsible practices. This Act’s emphasis on rehabilitation further underscores Thailand’s commitment to addressing alcohol-related issues holistically, promoting a healthier and more sustainable society.

Author: Panisa Suwanmatajarn, Managing Partner.

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Tax: Promoting Soft Power and Advancing Thailand’s Art Industry

Under the Thai government’s strategic initiative to enhance soft power, significant emphasis is placed on unlocking the nation’s creative potential. The objective is to cultivate the knowledge, skills, and creativity of Thai citizens, enabling them to generate economic value and income. This policy serves as a catalyst for economic growth and positions Thailand as a hub for innovation and cultural influence. By promoting arts and culture, the strategy enhances competitiveness and fosters sustainable international relations.

On August 19, 2025, the Cabinet approved in principle two draft laws proposed by the Ministry of Finance through the Revenue Department to support the purchase of artworks and bolster the livelihoods of artists. Only individual taxpayers are eligible to receive this benefit. Purchases must be made from Thai national artists in the field of visual arts, Silpathorn Artists in the field of visual arts, or artists registered with the Office of Contemporary Art and Culture, or from companies, juristic partnerships, foundations, or associations that sell, or auction artworks created by the Thai national artists in the fields as mentioned above.

Key Tax Measures:

1. Tax Incentives for Purchasing Artworks

•  Deduction Eligibility: Individual taxpayers can deduct actual expenses incurred from purchasing the above-mentioned fields of artworks, up to a maximum of 100,000 Baht per tax year.

•  Effective Period: Applicable for purchases made between January 1, 2025, and December 31, 2027.

•  Eligible Artworks: Artworks must be purchased from

       •  National Artists in the field of visual arts;

       •  Silpathorn Artists in the field of visual arts;

       •  Artists registered with the Office of Contemporary Art and Culture; or

       •  Companies, juristic partnerships, or foundations/associations engaged in the sale or auction of artworks.

•  Documentation Requirements: Taxpayers must provide:

       •  A full tax invoice or receipt; or

       •  Documentation describing the artworks.

2. Tax Support for Artists:

•  Deductible Eligibility: Individual artists earning income from the above-mentioned artworks will be entitled to deduct 60% of their income as expenses (increased from 30%). This benefit applies only to individual taxpayers and ordinary partnerships and does not extend to limited or public limited companies or other types of juristic persons.

•  Effective Period: This measure is effective from 2025 onward.

To receive this benefit, individual artists must report their art-related income and file their annual tax return and submit supporting documents such as receipts or proof of income to the Revenue Department.

Implementation and Oversight:

The Ministry of Finance, through the Revenue Department, is responsible for implementing and administering the tax measures, including granting deductions for art buyers and increased expense allowances for individual artists who sell their artworks. It also evaluates the fiscal impact, particularly the revenue forgone through these incentives.

The Ministry of Culture is, in the meantime, tasked with raising public awareness and promoting understanding of the measures within the creative sector, ensuring that both artists and buyers are aware of. It will also provide supporting data on the cultural and industry benefits of the scheme, which will be shared with the Ministry of Finance for overall policy evaluation.

Conclusion:

These tax measures underscore the Thai government’s commitment to fostering the creative industries and preserving cultural heritage. By providing incentives for artwork purchases and enhanced support for artists, the policies aim to stimulate economic growth, elevate cultural value, and strengthen Thailand’s soft power globally. Ongoing collaboration between the Ministry of Culture and the Ministry of Finance will ensure the effective execution and evaluation of these initiatives and maximizing the long-term impact.

Key Takeaways:

•  Tax Deduction for Art Purchases: Individual taxpayers can deduct up to 100,000 Baht annually for purchasing eligible artworks from January 1, 2025, to December 31, 2027.

•  Support for Artists: Individual artists who sell its eligible artworks will be benefit from a 60% flat-rate expense deduction, effective from 2025 onward.

•  Eligible Artworks: Must be created by National Artists, Silpathorn Artists, registered artists, or sold through authorized entities, with proper documentation.

•  Oversight: The Ministry of Culture will promote and monitor these measures, reporting annually to the Ministry of Finance.

•  Strategic Goal: These measures aim to enhance Thailand’s creative economy and global cultural influence through soft power.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand Launches D-VAT & SBT System: A New Digital Tax Service

On September 1, 2025, Thailand’s Revenue Department (RD) launched the D-VAT & SBT System, a comprehensive digital platform designed to modernize the administration of Value Added Tax (VAT) and Specific Business Tax (SBT). Built on the principle of “Taxpayer Centricity,” the platform positions taxpayers at the core of the system, delivering an end-to-end digital framework that consolidates all tax processes into a single streamlined service. The objective is to enhance tax compliance accessibility, convenience, efficiency, and security.

VAT is imposed on the sale of goods and provision of services, while SBT is an indirect tax levied on specific businesses exempt from VAT, including banking, finance, credit foncier, life insurance, pawn broking, and real estate sectors.

The Challenges Before Digitalization

Prior to this launch, taxpayers encountered significant obstacles:

Fragmented procedures – Multiple offices, platforms, and physical documentation requirements resulted in extended waiting periods and duplicated processes.

High error risk – Manual filing and verification processes created substantial potential for mistakes, frequently leading to penalties or disputes.

Lack of integration – Tax services were dispersed across different systems, leaving taxpayers without a unified digital solution.

These inefficiencies created compliance burdens for taxpayers and operational bottlenecks for the RD.

red dot lights on black surface

A Fully Integrated Digital Platform

The D-VAT & SBT System consolidates all VAT and SBT processes into a single online platform, encompassing every stage of the taxpayer journey:

  • Registration and updating of taxpayer information
  • Application submissions
  • Filing of tax returns
  • Refund assessments
  • Disbursement of refunds

Through this integration, the platform eliminates duplication, ensures consistency, and enables faster, more efficient processing.

Strategic Benefits for Businesses

The new system delivers tangible operational advantages to businesses:

One-stop digital access – All tax procedures are managed through a single platform, minimizing paperwork and streamlining compliance processes.

Enhanced cash flow – Accelerated filing and refund disbursement improve liquidity, enabling better financial planning and operational flexibility.

Reduced risk exposure – Automated validation and standardized forms minimize errors, helping organizations avoid penalties and disputes.

Convenience and accessibility – The platform operates 24/7, enabling businesses to manage tax obligations without physical visits to RD offices.

Conclusion

The launch of the D-VAT & SBT System represents a significant milestone in Thailand’s digital transformation of tax services. Beyond simplifying compliance procedures, the system enables businesses to reduce operational costs, strengthen financial management, and minimize risks through accurate and transparent processes.

By enhancing efficiency and reliability, the RD is modernizing tax administration while supporting Thai businesses to compete with greater confidence in today’s digital economy.

Author: Panisa Suwanmatajarn, Managing Partner.

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Sharing Economy: Modernizing Thailand’s Accommodation Legislation for Evolving Tourism Trends

The tourism industry in Thailand has undergone significant transformation in recent years, driven by economic shifts and evolving consumer preferences. Previously dominated by mass tourism, the sector is now witnessing a surge in niche tourism categories, including luxury tourism, creative tourism, slow tourism, solo tourism, medical and wellness tourism, and sports tourism. This shift has fueled steady growth in Thailand’s tourism market, with small-scale accommodations such as homestays, tents, campsites, and rafts gaining popularity. Concurrently, technological advancements have revolutionized how consumers access and book accommodations, with platforms such as Airbnb, Booking.com, and Agoda facilitating seamless transactions. To address these changes and support the burgeoning accommodation sector, the Thai government is drafting the Accommodation Act B.E. ….(“Accommodation Act”), which aims to modernize and streamline legislation governing accommodation businesses. This article outlines the key provisions of the draft legislation and its implications for the industry.

Redefining “Hotel” as “Accommodation”

The existing Hotel Act B.E. 2547 (2004) defines a “hotel” as a permanent structure with comprehensive public utilities, operated for profit. This restrictive definition excludes many contemporary accommodation types, such as homestays, tents, rafts, hostels, and other non-traditional lodging options, rendering them unable to obtain legal licenses. As a result, many such businesses operate outside the regulatory framework. The draft Accommodation Act introduces a broader and more inclusive term, “accommodation,” defined as any establishment providing temporary lodging to travelers or individuals for payment or monetary benefit. This redefinition encompasses all forms of lodging, including traditional hotels, and enables these businesses to obtain legal recognition and licensing while retaining the term “hotel” within the legislative framework.

Categorization of Accommodations

To accommodate the diverse range of lodging options, the draft bill introduces three distinct categories of accommodation, each with specific regulatory requirements:

1.  Accommodation Requiring Notification: This category includes small-scale establishments with no more than eight rooms and a capacity of up to 30 guests, as well as alternative lodging types such as homestays, tents, campsites, rafts, and mobile homes. Operators in this category must notify the registrar prior to commencing operations. This provision is designed to support small-scale entrepreneurs and legalize popular, non-traditional accommodation types.

2.  Accommodation Requiring Registration: This category applies to mid-sized establishments, such as hotels with more than eight but no more than 40 rooms, and condominium units rented for short-term stays (less than one month). These businesses must register with the registrar before operating.

3.  Accommodation Requiring a License: This category encompasses larger establishments, such as hotels with more than 40 rooms, which must obtain a formal license before beginning operations.

These categories ensure that regulatory requirements are proportionate to the scale and nature of the accommodation, fostering compliance while supporting diverse business models.

Streamlining Business Operations

The draft Accommodation Act prioritizes operational efficiency for accommodation businesses. It introduces an electronic licensing and registration system to simplify administrative processes. Additionally, the legislation proposes a “Super License” system, which consolidates multiple regulatory requirements into a single license. This innovation reduces administrative burdens and redundancies, enabling entrepreneurs to focus on business development while maintaining compliance with safety and operational standards.

Addressing Gaps in Current Legislation

The Hotel Act B.E. 2547 (2004), which currently governs many accommodation businesses, is outdated and does not account for the diversity of modern lodging options. Small-scale accommodations, tents, homestays, and rafts often lack the full amenities required under the existing law, leaving them unregulated and vulnerable to legal ambiguities. The draft Accommodation Act addresses this gap by providing a comprehensive regulatory framework that encompasses all types of lodging while maintaining high safety standards for guests. This legislative update aligns with contemporary consumer demands and the growing influence of online booking platforms, ensuring that Thailand’s accommodation sector remains competitive and responsive to market trends.

Key Takeaways

•  The draft Accommodation Act modernizes Thailand’s regulatory framework to accommodate the evolving tourism industry, particularly the rise of niche and small-scale accommodations.

•  The introduction of the term “accommodation” replaces the restrictive “hotel” definition, enabling legal recognition and licensing for diverse lodging types.

•  Three distinct categories—notification, registration, and licensing—cater to different scales and types of accommodation businesses, promoting compliance and flexibility.

•  The electronic licensing system and “Super License” initiative streamline administrative processes, supporting entrepreneurs and reducing operational redundancies.

•  By addressing gaps in the Hotel Act B.E. 2547 (2004), the new legislation ensures safety standards and aligns with modern consumer preferences and technological advancements in booking platforms.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand Approves Strategic Stimulus Fund Reallocation to Address Trade Pressures and Strengthen Key Industries

The Thai government has approved the strategic reallocation of funds from its Economic Stimulus Budget to support those affected from the U.S. tariff measures. The reallocated resources will prioritize rapidly implementable projects with demonstrable economic impact, focusing on mitigating U.S. tariff effects, strengthening the agricultural sector, and supporting small-scale entrepreneurs.

Economic Stimulus Budget Framework

Phase 1: Initial budget allocation supports 481 projects encompassing 8,939 activities across infrastructure investment, tourism development, agricultural modernization, and community economic programs.

Phase 2: Secondary budget allocation targets strategic industries and establishes a student loan fund. Priority industries include:

  • Next-Generation Automotive
  • Intelligent Electronics
  • High-Quality Tourism
  • Agriculture and Biotechnology
  • High-Value Food Processing
  • Robotics
  • Aviation
  • Digital Industry
  • Comprehensive Medical Industry
  • Biofuels and Biochemicals

Strategic Priorities for Fund Reallocation

Government officials have emphasized that reallocated funds will be deployed exclusively for projects demonstrating rapid execution capabilities and measurable outcomes. Priority areas encompass:

  • Supporting exporters from U.S. tariff affects
  • Strengthening the agricultural sector
  • Providing targeted assistance to small and medium enterprises (SMEs)

U.S. Trade Relations Context

Alongside budget management initiatives, trade negotiations with the U.S. remain a critical policy concern. Discussions regarding rules of origin for Thai exports have been deferred, while the establishment of a 40% local content requirement remains unresolved. Thai government officials maintain that adopting a definitive position is premature until the U.S. presents its formal policy stance, enabling Thai policymakers to formulate an appropriate strategic response. The budget as allocated will be measured to support the affected until this has come to the conclusion.

Partnership Talks for Sustainable Growth

The Minister of Finance has recently held discussions with members of the Congressional Delegation of the U.S. on various below issues for further consideration and collaboration.

  1. Investment in Thailand – The U.S. delegation recognized Thailand as a country with strong investment potential.
  2. Public Debt – Thailand’s public debt level is relatively low compared to other ASEAN member countries.
  3. 64.2% of its Gross Domestic Product (“GDP”)
  4. 99.2% domestic debt.
  5. 0.8% external debt.
  6. Trade Deficit and Reciprocal Tariff – reaffirmed its commitment to the agreement, including
  7. Increasing imports of the U.S. agricultural products, energy supplies, and military equipment;
  8. Reducing non-tariff barriers (NTBs); and
  9. Monitoring and regulating the transshipment of goods through third countries.

Conclusion

The stimulus fund reallocation demonstrates Thailand’s commitment to balancing immediate economic relief with long-term strategic positioning. Through measures to mitigate U.S. tariff pressures, strengthen agricultural competitiveness, and support SME resilience, the government seeks to stabilize near-term economic performance. Simultaneously, channeling resources into high-potential industries positions Thailand for sustained growth and enhanced global competitiveness.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand’s Strategic Tax Reform: Tax Credit Incentives to Drive Investment and Startup Growth Under the Global Minimum Tax Framework

Thailand is implementing comprehensive tax reform measures to strengthen its competitive position within the evolving global investment landscape. In alignment with the Organization for Economic Co-operation and Development (OECD) Global Minimum Tax (GMT) framework, the government has introduced Qualified Refundable Tax Credits (QRTCs) designed to attract high-quality foreign direct investment and foster domestic innovation. These strategic initiatives, coupled with an enhanced startup support program, aim to bolster national competitiveness, retain strategic industries, and promote sustainable economic growth.

Legislative Framework and Approval

On August 1, 2025, Thailand’s National Committee on Enhancing Competitiveness for Targeted Industries Policies formally approved amendments to the National Competitiveness Enhancement Act of 2017. This legislative milestone establishes the foundation for implementing new investment rights and incentives, including refundable tax credits, in direct response to GMT adoption requirements.

OECD Alignment and Global Minimum Tax Response

The GMT framework mandates that multinational enterprises (MNEs) with consolidated global revenues exceeding €750 million (approximately THB 28 billion) maintain a minimum effective tax rate of 15% across all operational jurisdictions. When host countries offer tax incentives that reduce the effective tax rate below this threshold, the MNE’s home country reserves the right to impose supplementary taxes to capture the differential.

To preserve Thailand’s attractiveness as a foreign investment destination, the National Committee has strategically approved amendments introducing QRTCs as a new category of investment incentives. This mechanism positions Thailand to effectively compete for investment capital, maintain existing manufacturing operations in targeted sectors, and stimulate new investments that enhance competitiveness while driving sustainable economic development.

Qualified Refundable Tax Credit Structure

These tax credits will be available to qualified foreign investors, particularly those engaged in:

  • Manufacturing and Research & Development Operations: Establishing or expanding production facilities and R&D centers in Thailand
  • High-Value Employment Generation: Creating positions that promote skilled workforce development and knowledge transfer
  • Sustainable Innovation: Advancing environmental sustainability through green technology adoption and innovative solutions

The credits function as flexible instruments that can be applied toward various tax obligations, including corporate income tax, top-up tax under GMT provisions, and other applicable taxes and duties. Should credit balances remain after tax applications, investors may request cash refunds within a four-year period, subject to established eligibility criteria and regulatory requirements.

Enhanced Startup Support Framework

Complementing international tax policy reforms, the Thai government has prioritized domestic innovation through targeted support for Thai startups operating in deep technology (Deep Tech) sectors where Thailand demonstrates competitive advantages. Priority sectors include agriculture and food technology, biotechnology, robotics and automation, artificial intelligence, medical technology, and green industries.

Support is delivered through a Matching Fund mechanism administered under the Competitiveness Enhancement Fund, managed by the Board of Investment (BOI). The program operates under the following parameters:

  • Co-Investment Requirements: Startups must secure minimum co-investment of THB 10 million from venture capital funds registered with the National Innovation Agency (NIA) or established by licensed financial institutions operating in Thailand
  • Matching Fund Provision: The BOI may provide matching funds equivalent to venture capital contributions, capped at THB 20 million per project

Ownership and Control Requirements

To ensure direct benefits accrue to Thai-owned enterprises, the following ownership structures are mandated:

  • Thai Majority Ownership: Thai nationals or Thai-registered entities must maintain at least 51% shareholding
  • Founder Control:  founders must collectively retain at least 60% of total shares

Therefore, as long as the startups remains under this promotional project or has not yet received the full amount of matching funds from the BOI, it is required to maintain a minimum of 51% Thai shareholding. Additionally, the founders, including both Thai and foreigners, must collectively retain at least 60% of the control throughout this period.

Strategic Implications and Outlook

The amendment to the National Competitiveness Enhancement Act provides the BOI with sophisticated policy instruments to reinforce investor confidence during a period of significant transformation in global tax policy. While QRTC implementation awaits Cabinet approval and subsequent regulatory framework development by the Revenue Department, this initiative represents a crucial evolution in Thailand’s investment promotion strategy.

Simultaneously, the strengthened startup promotion measures will expand market opportunities and accelerate the development of Thai Deep Tech enterprises, further establishing Thailand’s position as a regional hub for innovation-driven, sustainable investment.

These coordinated policy measures demonstrate Thailand’s proactive approach to navigating the complexities of international tax harmonization while maintaining its competitive edge in attracting both foreign direct investment and nurturing domestic innovation capabilities.

Author: Panisa Suwanmatajarn, Managing Partner.

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Investment: Government Advances 99-Year Property Lease Law to Boost Investment

The Thai government is accelerating efforts to amend the Right-Based Property Act B.E. 2562 (2019), aiming to extend the lease term for real estate from 30 years to 99 years. This legislative push is designed to attract foreign investment, stimulate economic growth, and support key national policies such as the “Housing for Thais” initiative, the Land Bridge project, and land reclamation efforts. The proposed law introduces a novel legal concept known as “right-based property”, which offers a framework for long-term property leases while ensuring assets revert to state ownership after the lease term expires. This article explores the objectives of the law, the significance of right-based property, and its anticipated economic impact.

Understanding Right-Based Property:

Right-based property, as defined under the Right-Based Property Act B.E. 2562 (2019), is a new category of property introduced to enhance the economic utility of real estate in Thailand. According to the Civil and Commercial Code, “property” refers to tangible objects, while “assets” encompass both tangible and intangible items that hold economic value and can be legally possessed. Real estate, or immovable property, includes land, structures permanently affixed to it, and associated property rights. Movable property covers all other assets, including related rights.

Right-based property, however, is a distinct legal construct that refers to the right to use and benefit from immovable property for a specified period, as stipulated in the Right-Based Property Act B.E. 2562 (2019). Unlike traditional leases under the Civil and Commercial Code, which are limited to contractual rights between parties, right-based property can be transferred, inherited, or used as collateral for debt through mortgaging. This makes it a more flexible and economically viable instrument for long-term investment.

To establish right-based property, the owner of immovable property, such as titled land, land with buildings, or condominium units, must apply to the relevant authority, typically the Land Department. The application requires the submission of documents specifying the lease term, which is currently capped at 30 years but proposed to be extended to 99 years. Once registered, a certificate of right-based property is issued, and the property cannot be subdivided or merged with other parcels during the lease term. Any modifications, such as new constructions, revert to the original property owner upon the lease’s expiration, unless otherwise agreed.

Government’s Push for 99-Year Leases:

The Thai government is prioritizing the amendment of the Right-Based Property Act B.E. 2562 (2019) to extend the maximum lease term to 99 years. The amendment aims to remove legal barriers to foreign investment, encourage large-scale real estate projects, and attract high-income individuals and skilled professionals to Thailand.

The government anticipates that the extended lease term will support transformative projects, including:

an aerial view of a large warehouse with trucks

1.  Land Bridge Project: A mega-infrastructure initiative to connect the Gulf of Thailand and the Andaman Sea, fostering trade and logistics.

2.  Land Reclamation: Private-sector-led coastal reclamation projects to create new investment zones, with long-term leases incentivizing participation.

3.  Housing for Thais: Affordable urban housing schemes integrated with reduced public transport costs (e.g., 20-baht flat-rate fares) to lower living expenses for middle-income Thais.

4.  Green Energy Initiatives: Long-term land leases for projects like solar farms, particularly in the Northeast, to produce affordable electricity (estimated at 3 baht per unit) for economic hubs like Bangkok and data centers.

5.  Talent Hub Development: Attracting high-skilled global professionals by offering long-term property rights, enhancing Thailand’s appeal as a destination for talent.

Economic and Legal Implications:

The proposed law is expected to yield significant economic benefits while addressing legal loopholes. Key advantages include:

•  Increased Foreign Investment: The 99-year lease term aligns Thailand with countries like the United Kingdom, where leases can extend up to 99 years. This makes Thailand more competitive in attracting foreign investors for high-end real estate projects, such as luxury hotels, office buildings, and residential complexes. The influx of capital is expected to stimulate economic activity without funds leaving the country.

•  Enhanced Transparency: The law aims to curb illegal practices, such as the use of Thai nominees to bypass foreign ownership restrictions. By requiring assets under the right-based property scheme to be managed by the Treasury Department and revert to state ownership after 99 years, the government ensures national control over land resources, refuting claims of “selling out” the country.

•  Support for Diverse Industries: Beyond real estate, the law facilitates long-term investments in sectors like international education (e.g., foreign ownership of international schools) and financial hubs, fostering economic diversification.

•  Addressing Demographic Challenges: With Thailand’s population projected to decline to 37 million within 50 years, the law seeks to attract high-skilled foreign workers to bolster economic growth. The extended lease term provides the stability needed to encourage long-term residency.

Safeguards and Conditions:

To address concerns about national sovereignty, the government has incorporated safeguards into the proposed law. Notably, assets under the right-based property scheme will transfer to the Treasury Department upon lease expiration, becoming part of the nation’s sovereign wealth. Agricultural land is explicitly excluded from the program to protect food security and rural livelihoods. Additionally, any property encumbered by mortgages or other rights requires consent from relevant parties before entering the right-based property scheme.

Legislative Timeline:

The government is fast-tracking the amendment process, aiming for parliamentary approval and enactment by 2025.

Conclusion:

Thailand’s push to extend property lease terms to 99 years through the Right-Based Property Law represents a strategic effort to unlock economic potential, attract global investment, and support transformative national projects. By introducing the concept of right-based property, the government offers a flexible, legally robust mechanism to enhance the economic utility of real estate while safeguarding national interests. If enacted as planned in 2025, this law could position Thailand as a leading destination for foreign capital and talent, driving sustainable economic growth in the face of demographic and global challenges.

Author: Panisa Suwanmatajarn, Managing Partner.

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