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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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The Ripple Effect EP. 10: Thailand–U.S. Tariff Agreement: Navigating the Reduction from 36% to 19%

Following intensive diplomatic negotiations, Thailand has successfully secured a substantial reduction in U.S. import tariffs from 36% to 19%, effective August 1, 2025. This agreement represents a significant diplomatic and economic achievement that will enhance Thailand’s export competitiveness and strengthen bilateral trade relations.

Background of Thailand–U.S. Tariff Negotiations

On July 7, 2025, the United States government formally notified Thailand of its intention to impose a 36% tariff on Thai imports, scheduled to take effect on August 1, 2025. This proposed tariff threatened to significantly impact Thailand’s international trade sector and prompted immediate diplomatic action.

The Thai government responded swiftly by initiating comprehensive diplomatic engagement with U.S. authorities to seek reconsideration and reduction of the proposed tariff rates. On July 17, 2025, the Minister of Finance formally commenced trade negotiations with the Office of the United States Trade Representative (USTR) by submitting a comprehensive revised trade package. This proposal included:

  • Reciprocal tariff reductions on various U.S. goods
  • Expanded market access for U.S. products
  • Enhanced investment opportunities for U.S. companies in Thailand

Following the USTR’s feedback and additional queries, Thailand refined its proposal through multiple iterations. On July 23, 2025, Thailand submitted its final trade proposal to the USTR, representing the culmination of intensive negotiations during which Thailand had already presented over 90% of its revised trade offers.

The final phase of negotiations occurred on July 29, 2025, when the Minister of Finance and the Thai delegation conducted another round of high-level discussions with the USTR. During this meeting, the USTR presented a final draft document for submission to the U.S. President, which the Thai delegation reviewed and returned, marking one of the final procedural steps before the formal presidential announcement.

Negotiation Outcome

On July 31, 2025, the White House officially announced through its website that Thailand had successfully negotiated a reciprocal tariff agreement with the United States, achieving a significant reduction in import duties on Thai goods from 36% to 19%.

aerial view of containers and machinery in a port

Key Implementation Details

  • Effective Date: The new 19% tariff rate takes effect on August 1, 2025
  • Transition Period: Shipments currently in transit will remain subject to the existing 10% tariff rate
  • Full Implementation: The new tariff structure will be fully operational by August 7, 2025
  • Enforcement Measures: Goods involved in transshipment or tariff evasion will face a penalty rate of 40%

This reduction is expected to significantly enhance Thailand’s competitiveness in the U.S. market while bolstering investor confidence in Thailand’s economic prospects.

Strategic Government Support

1. Financial Support Mechanisms for Entrepreneurs

The Thai government has developed targeted support measures for domestic entrepreneurs affected by the evolving U.S. tariff environment:

Soft Loan Program: Implementation of low-interest loan facilities designed to enhance liquidity for affected businesses and maintain operational continuity.

Capital Enhancement Fund: Establishment of a dedicated THB 10 billion fund to strengthen business capabilities and competitiveness. The Federation of Thai Industries and the Thai Chamber of Commerce have been designated as implementing partners responsible for:

  • Data collection and entrepreneur classification
  • Facilitating machinery modernization initiatives
  • Supporting production efficiency improvements

2. Economic Restructuring and Investment Enhancement

The government has committed to comprehensive economic reform aimed at increasing domestic investment from the current average of 20% to 35% of GDP. Key strategic elements include:

Short-term Objectives:

  • Maintaining economic growth rate targets of 3% for the second quarter
  • Managing transition challenges while preserving economic stability

Long-term Vision:

  • Adoption of advanced technologies to address structural investment constraints
  • Systematic removal of barriers that have historically limited investment growth
  • Achievement of sustained investment levels between 30-35% of GDP to ensure long-term economic stability

Conclusion and Outlook

The successful reduction of U.S. tariffs on Thai goods from 36% to 19% demonstrates Thailand’s diplomatic effectiveness and commitment to strengthening bilateral trade relations. This achievement will deliver tangible benefits including:

  • Reduced export costs for Thai manufacturers
  • Expanded market access opportunities in the U.S.
  • Enhanced competitive positioning for Thai products
  • Increased investor confidence in Thailand’s economic resilience

The agreement positions Thailand favorably for sustained export growth while reinforcing its status as a reliable trading partner. Moving forward, continued monitoring of policy implementation and adaptive measures will be essential to maximize the benefits of this tariff reduction and maintain Thailand’s competitive advantage in the evolving global trade environment.

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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The Ripple Effect EP. 9: Navigating Tariffs and Technology Controls: Thailand’s Strategic Response to U.S. Trade Pressures

Thailand is currently navigating a rapidly evolving trade landscape marked by two significant challenges. Firstly, the United States set to increase tariffs on selected Thai exports to 36%, effective on August 1, 2025. Secondly, the U.S. Department of Commerce is reportedly considering stricter export controls on high-performance NVIDIA AI chips destined for particular countries, including Thailand, citing concerns about potential transshipment to China. These developments could have substantial implications for Thailand’s trade relations and regulatory compliance framework.

In response, the Thai government has implemented swift and strategic measures, including initiating diplomatic engagements with U.S. counterparts, implementing targeted investment promotion strategies, and enhancing oversight of advanced technologies to ensure compliance with international trade regulations.

Trade Negotiations and Economic Safeguards

The Finance Minister has proposed offering tariff exemptions on selected U.S. imports as leverage to negotiate the reduction of retaliatory tariffs from 36% to levels comparable to those imposed on Vietnam and Indonesia—approximately 20%.

1. Selective Market Opening

Thailand is prepared to reduce tariffs—potentially to 0%—on U.S. goods that the country does not produce or cannot produce in sufficient quantities, such as specific agricultural or industrial products. However, this market access must not conflict with Thailand’s commitments under existing Free Trade Agreements (FTAs). Thai agricultural producers will remain protected under these arrangements.

2. Promoting Thai Investment in the United States

The U.S. seeks to boost domestic manufacturing and exports, while Thailand aims to increase investment in processed agriculture and energy sectors. On the other hand, the U.S. currently maintains an energy surplus, offering natural gas at significantly reduced prices (2–3 USD per million BTU compared to the market price of 10–11 USD) to Thailand.

3. Preventing Origin Fraud and Promoting Local Content

The U.S. has proposed stricter local content requirements, potentially increasing from 40% to 60–70%, to prevent the misuse of trade privileges. However, Thai business operators view this as an opportunity to boost domestic production and strengthen the local supply chain. By relying more on local content, Thailand can create opportunities for its manufacturers to enhance their production capabilities and become more competitive in global markets.

Small and Medium Enterprise (SME) Support Measures

To mitigate the impact on Thai SMEs and the agricultural sector, the government plans to allocate 200 billion THB in soft loans through state-owned banks, with interest rates as low as 0.01%. This initiative will support investment, employment, inventory management, and other operational costs. The government will subsidize the standard 2% interest rate as part of its comprehensive business relief measures.

people walking on pedestrian lane during daytime

Board of Investment (BOI) Measures to Retain Investment

Following the U.S. government’s announcement of reciprocal tariffs over the past two months, Thailand’s BOI has consulted with both domestic and foreign investors and introduced a comprehensive policy package. This initiative addresses two primary objectives:

1. Enhancing Thai Business Competitiveness and Strengthening Domestic Supply Chains

a. SME Efficiency Support: Thai SMEs are encouraged to invest in upgrades including machinery modernization, automation, energy efficiency improvements, and sustainable practices. Tax incentives have been enhanced from a 3-year exemption at 50% of investment value to a 5-year exemption at 100%.

b. Local Content Promotion: Companies in the electric vehicle (EV) and electronics sectors that meet specific local content requirements and obtain “Made in Thailand” certification will receive an additional 2-year corporate income tax reduction of 50%.

2. Mitigating Risks from U.S. Trade Measures and Regulating Specific Sectors

a. Enhanced Production Process Requirements: For sensitive industries (e.g., automotive parts, electronics, metals), the BOI now mandates clearly defined transformation of raw materials, requiring a change in customs tariff classification of at least four digits to ensure value-added production within Thailand.

b. Investment Regulation in High-Risk or Oversupplied Sectors: The BOI will discontinue promotion of specific low-technology or oversupplied industries (e.g., solar panels, furniture, long steel products). Certain sectors must maintain majority Thai ownership unless located in designated economic zones.

c. Foreign Labor Regulation Adjustments: Manufacturing facilities employing over 100 staffs must maintain a workforce that is at least 70% Thai nationals to ensure local employment benefits.

These incentives aim to attract foreign manufacturers to Thailand, strengthen supply chain integrity, and enhance the country’s overall economic resilience.

U.S. AI Chip Export Controls and Regional Implications

The U.S. has intensified export controls on advanced AI chips to prevent potential rerouting to China—a measure that could disrupt regional digital infrastructure projects. However, the Federation of Thai Industries (FTI) has clarified that such restrictions are unlikely to impact legitimate initiatives, including Amazon Web Services’ (AWS) has planned to set up data center in Thailand.

Current U.S. measures primarily target transshipment risks rather than restricting local deployment. Nevertheless, uncertainties persist, particularly regarding the scope and enforcement of these controls. For instance, U.S. regulations prohibit foreign data centers from exceeding the processing capacity of their American counterparts, and chipmaker NVIDIA is already prioritizing U.S.-based clients due to supply constraints.

Given these challenges, Thailand must continue monitoring U.S. policy developments closely while accelerating digital infrastructure upgrades and ensuring regulatory transparency.

Conclusion: A Unified and Strategic Path Forward

Thailand’s evolving role in global trade necessitates, a comprehensive strategy to address rising tariffs, technological scrutiny and pragmatic diplomatic approach and reinforcing investor confidence through proactive BOI measures and credible technology governance, Thailand can establish itself as a trustworthy and resilient economic partner.

The path forward requires coherence between domestic policy, international engagement, and innovation readiness, ensuring that Thailand not only weathers current economic headwinds but emerges stronger in the global economic arena.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand : Tax Exemption of Dividend

ConceptExplanation
Dividend and Capital gain ExemptionTax Exemption of Dividend
1. Half Tax Exemption
A limited company incorporated under Thai laws receiving dividends from another company incorporated under Thai laws must include the income in its tax calculation. However, only 50% of such income is subject to tax.

2. Full Tax Exemption
A public limited company incorporated under Thai laws whether it is listed or non-listed company holding at least 25% of the voting rights in the dividend-distributing company incorporated under Thai laws is fully exempted from tax on dividends, provided that the dividend-distributing company does not hold any shares in the dividend recipient company whether directly or indirectly. In both cases, the holding company must hold shares in the dividend-distributing company for at least 3 months before and after the dividend payment.

Tax Exemption of Capital Gain
Tax exemption of capital gain applies only in certain cases of share transfers where specific holding periods and criteria of the shares in the company incorporate and operated in Thailand are met.  
Participation in Non- Resident EntitiesA limited or public limited company incorporated under Thai laws shall be exempt from tax on dividends distributed by any company or partnership incorporated under foreign laws if the following conditions are met:
1. Such Thai company must hold at least 25% of the total voting shares in the dividend-distributing entity, and the shares must be held for at least six months from the date of acquisition to the date the dividend is distributed; and
2. The dividend must be paid from net profits after the tax deduction in the country where the dividend-distributing entity is incorporated, at a rate of not less than 15% of the net profits after tax deduction, regardless of whether that country provides any tax reduction or exemption for the dividend distributing entity.  
Group of Companies StructureA limited or public limited company incorporated under Thai laws shall be exempt from tax on dividends distributed by any company or partnership incorporated under foreign laws if the following conditions are met:
1. Such Thai company must hold at least 25% of the total voting shares in the dividend-distributing entity, and the shares must be held for at least six months from the date of acquisition to the date the dividend is distributed; and
2. The dividend must be paid from net profits after the tax deduction in the country where the dividend-distributing entity is incorporated, at a rate of not less than 15% of the net profits after tax deduction, regardless of whether that country provides any tax reduction or exemption for the dividend distributing entity.  
Group of Companies StructureAny group of companies managed through a holding structure enables centralized and unified control, as well as strategic decision-making. The profits generated by subsidiaries/affiliates of the group of companies will also be required to be retained and reinvested within the group.  
Participation requirementsTo qualify for full dividend tax exemption under Thai laws, the parent company must hold at least 25% of the total voting shares in the subsidiary, with no cross-shareholding structure.
In addition, the parent company must have held such shares for not less than three months before and after the dividend distribution date.  
Benefits of Holding sharesHolding shares in other companies with centralized control will reduce costs, manage risk, protect assets, and provide tax benefits.  
Subholding StructureThai law does not specifically define a subholding company. If it acts like a holding company regardless of level of shareholding structure, the conditions regarding the holding company will be applied.  
Protection of Minority ShareholdersUnder the Thai laws, protection of minority shareholders can be in several form, including participation in meetings, voting rights, and the ability to inspect company records as mutually specified in the articles of association of the company.  
Deduction to avoid Double TaxationDouble Tax Agreements (DTAs)
Bilateral tax treaties are signed by and between Thailand and many other contracting countries (e.g., the United States, Singapore, Japan, China, the United Kingdom, Germany, Australia, etc.) to prevent natural persons and juristic persons with cross-border income from facing double taxation in both Thailand and such particular foreign countries. The measures can be in a form of tax credit or tax exemption.  
Consideration of the Holding Company as a Taxable Person for VAT purposesBusiness engaging in certain activities are required to register for VAT. However, a holding business is not considered as a business activity subject to VAT. Thus, it is not required to register and is not subject to collect and conduct VAT filing.  
Taxation effects on Non-Resident HoldingsA company incorporated under foreign laws that does not conduct business in Thailand, but receives assessable income, such as dividends or other benefits from a company operated and based in Thailand, will be liable to pay tax under Thai laws.
Additionally, capital gains from the sale of shares in a company incorporated and operated in Thailand by a non-resident are subject to withholding tax in Thailand as Thai-sourced income.
Requirements for Capital Gains ExemptionCapital gains from the sale of shares of the company incorporate and operated in Thailand may be exempt from the income tax if the following conditions are met:
• The shares have been held for at least 24 months prior to the sale;
• The sale results in a capital gain (i.e., generating profits from the original investment);
• The company incorporated and operated in Thailand earns at least 80% of its revenue from government-promoted activities for two consecutive accounting years prior to the sale.
In addition, capital gains from the transfer of shares in a venture capital holding company may also be exempt from tax, provided that a venture capital holding company has invested in a company incorporated and operated in Thailand that earns at least 80% of its revenue from government-promoted activities for two consecutive accounting years prior to the sale.  
Group Structure and Tax ConsolidationThailand’s tax system treats each company as a separate taxable entity, requiring companies to file taxes individually. There is no provision under the Thai Revenue Code for group tax filing or consolidated tax returns. Profits and losses cannot be offset across the group.  
Liability of the Parent CompanyA parent company is generally not liable for the debts or obligations of its subsidiary/affiliates, as it is a separate entity from its subsidiaries/affiliates. However, as a shareholder, it is liable to pay for any unpaid amount of shares it holds in such subsidiaries/affiliates. The liability will be as in the amount of unpaid amount of shares.

Source: International Comparison July 2025: Antea

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Amendments to Thailand’s Act on National Competitive Enhancement: Aligning with OECD’s Global Minimum Tax

Background

The Act on National Competitive Enhancement for Targeted Industries B.E. 2560 (A.D. 2017) (the “Act“) was published in the Royal Gazette and became effective on 14 February 2017. The Act’s primary objective is to promote investment in targeted industries and enhance Thailand’s national competitiveness, with the overarching goal of transitioning the country beyond middle-income status. Under the Act, eligible targeted industries must either be newly introduced to Thailand or utilize new technologies or advanced production processes that contribute to the development and promotion of innovation.

Purpose of the Amendment

The Thai government has recently announced its intention to amend the Act to align the country’s legislative framework with the tax policy principles established by the Organization for Economic Co-operation and Development (OECD). In this regard, a draft Royal Decree has been issued to amend the Act on National Competitive Enhancement for Targeted Industries (No. …), B.E. …. (the “Draft Act“).

The proposed amendments aim to align Thailand’s legal framework with international tax standards in the digital economy, particularly those developed under the OECD’s Base Erosion and Profit Shifting (BEPS) 2.0 Pillar Two initiative—commonly referred to as the Global Minimum Tax (GMT).

Under BEPS 2.0 Pillar Two, multinational enterprise (MNE) groups with consolidated annual revenues of at least EUR 750 million (approximately THB 28 billion) are subject to a minimum effective tax rate (ETR) of 15% on their profits in each jurisdiction. If a subsidiary in any given jurisdiction is subject to an ETR below this threshold, a top-up tax may be levied by the jurisdiction of the ultimate parent entity or another qualifying group entity, pursuant to the OECD’s Model Rules.

In response to these global developments, Thailand is recalibrating its investment incentives regime to ensure continued competitiveness while maintaining compliance with emerging international tax obligations.

intermodal container stacked on port

Key Proposed Amendments

The key proposed amendments include:

  1. Granting of Tax Credit Rights and Benefits – Definitions are introduced for “Tax Credit,” “Remaining Tax Credit,” and “Tax Credit Refund.” The proposed amendments allow promoted entities to utilize tax credits instead of direct tax payments.
  2. Refund of Remaining Tax Credits – The Policy Commission may consider granting refunds for unused tax credits to promoted entities, subject to the availability of funds and limited to the remaining tax credit balance.
  3. Revocation of Tax Credit Rights and Benefits – If the Policy Commission revokes a promoted entity’s tax credit rights and benefits, the entity will forfeit all entitlement to tax credits for the relevant accounting period. Applicable tax laws will then be enforced accordingly.
  4. Inter-Agency Data Coordination – For purposes of investment promotion and evaluation, the Board of Investment (BOI) may request relevant tax collection data from the Ministry of Finance.
  5. Transitional Provision – If deemed necessary, the Policy Commission may authorize the retroactive application of tax credit rights and benefits to qualifying investments or expenditures incurred from 1 January 2025.

Current Status

The BOI serves as the principal agency responsible for the proposed legislative amendments, which are currently subject to a public consultation process taking place from 4 July to 18 July 2025.

Given the significant impact of tax credit utilization on government revenue and its relevance to the public interest, it is essential that the granting and use of tax incentives strictly adhere to the policies established by the National Policy Commission. Regulation through a structured permit or licensing system is necessary to maximize national development benefits, particularly in research and development (R&D), innovation, and the development of specialized talent in targeted industries.

Conclusion

Thailand’s adoption of the OECD’s GMT framework through the proposed legislative amendments underscores the country’s commitment to international tax cooperation while preserving its appeal as an investment destination. The introduction of the Qualified Refundable Tax Credit (QRTC) mechanism represents a strategic effort to foster innovation-led growth and align tax incentives with national economic and industrial priorities.

These reforms reflect Thailand’s broader objective of establishing itself as a regional hub for high-value, innovation-driven industries and as a responsible leader in economic development. The Draft Act is currently subject to a public hearing process, the outcome of which will be instrumental in determining the final shape of the legislation. As Thailand progresses toward implementation, sustained policy oversight and active engagement with stakeholders will be critical to ensuring the success and effectiveness of this landmark tax reform.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand’s Entertainment Complex Bill: Legal Innovation Meets Political Reality

The draft Entertainment Complex Bill represented Thailand’s strategic legislative initiative to establish the country as a regional tourism and entertainment hub through the regulated legalization of casino operations. As detailed in our initial analysis, “Thailand Unveils Draft Entertainment Complex Bill: A Path to Casino Legalization,” this proposal sought to attract substantial foreign investment, enhance tourism revenue, and curtail illegal gambling activities through a comprehensive regulatory framework that integrated casino facilities within large-scale entertainment complexes featuring hotels, shopping centers, stadiums, and gaming venues.

However, as documented in our subsequent report, “Updated: Thailand Unveils Draft Entertainment Complex Bill,” the legislation encountered significant obstacles that ultimately led to its withdrawal from the parliamentary process on July 9, 2025. This development demonstrates the complex interplay between economic policy objectives, public sentiment, and political feasibility in Thailand’s legislative environment.

Legislative Framework and Economic Projections

Original Policy Architecture

The Entertainment Complex Bill was structured to legalize casino operations exclusively within fully licensed entertainment venues, requiring comprehensive integrated facilities including hotels, shopping centers, stadiums, and gaming centers. The legislation established stringent entry requirements, mandating applicants to register Thai companies with a minimum paid-up capital of THB 10 billion.

The framework incorporated specific access controls for Thai citizens, including a THB 5,000 per-visit admission fee and mandatory fixed deposit requirements, alongside comprehensive financial and background verification procedures. Government projections estimated the initiative would generate over THB 100 billion in investment, increase annual tourism revenue by 5-10 percent, and produce between THB 12-40 billion in annual tax revenue while simultaneously reducing illegal gambling activities.

Political Trajectory and Opposition

Despite receiving Cabinet approval in January 2025, the Bill encountered substantial resistance from civil society organizations, religious groups, political instability and the general public. On July 8, 2025, the Cabinet formally withdrew the legislation from Parliament’s consideration agenda, characterizing the action as a deferral for additional public consultation rather than permanent abandonment. However, the indefinite nature of this delay has raised questions regarding the bill’s long-term viability.

Future Legislative Considerations

While the draft has been withdrawn, the possibility of reintroduction remains viable. Government officials have indicated that the bill may be reconsidered during future legislative sessions once political conditions stabilize and a broader public consensus is achieved. No specific timeline has been established, though the issue is expected to remain on the national policy agenda.

Analysis and Implications

Balancing Economic Innovation with Social Responsibility

The Entertainment Complex Bill exemplified Thailand’s attempt to pursue strategic legal reform aimed at modernizing its tourism sector while establishing controlled regulatory frameworks for casino operations. Although the legislation possessed sound economic rationale, its social and political foundations proved insufficiently robust to withstand public scrutiny and political volatility.

The government’s decision to defer the bill reflects the imperative to carefully balance legislative objectives with public concerns and democratic accountability. This case underscores the critical importance of inclusive policy dialogue and precise legal frameworks in complex regulatory environments.

Recommendations for Future Policy Development

Future attempts to reintroduce similar legislation must prioritize several key elements:

Stakeholder Engagement: Comprehensive consultation with diverse societal groups, including religious organizations, civil society, and economic stakeholders, must precede legislative drafting to ensure broad-based support.

Regulatory Precision: Enhanced specificity in regulatory frameworks, particularly regarding social safeguards, taxation mechanisms, and oversight structures, will be essential for building public confidence.

Political Stability: Successful passage will require stable political conditions and coalition support to navigate the legislative process effectively.

Public Education: Transparent communication regarding economic benefits, social protections, and regulatory mechanisms will be crucial for building public understanding and acceptance.

Conclusion

The Entertainment Complex Bill’s withdrawal illustrates the complex dynamics inherent in Thailand’s legislative process, where economic innovation must be carefully balanced against social considerations and political realities. While the bill’s economic merits were substantial, its social and political foundations required further development to ensure successful implementation.

This experience demonstrates that sustainable legal reform in Thailand requires not only sound economic policy but also robust public engagement, political consensus, and comprehensive regulatory frameworks. Future efforts to advance similar legislation must prioritize inclusive dialogue, precise legal mechanisms, and broad-based stakeholder support to achieve lasting success.

The case ultimately reinforces the principle that effective governance requires harmonizing economic innovation with social responsibility, ensuring that policy development is both economically viable and socially sustainable. Only through such consensus-driven approaches can Thailand successfully navigate the complex intersection of legal reform, economic development, and democratic accountability.

Author: Panisa Suwanmatajarn, Managing Partner.

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GI: New Framework for International Geographical Indication Registration

Introduction:

Thailand’s Department of Intellectual Property (DIP) has released a draft ministerial regulation outlining the procedures for registering foreign Geographical Indications (GIs) under international agreements. This initiative marks a significant step toward enhancing the protection of GI products and fostering international cooperation in intellectual property rights. The regulation is currently open for public consultation, inviting stakeholders to provide feedback before its formal enactment.

Purpose and Scope:

The proposed ministerial regulation establishes a legal and procedural framework for registering foreign GIs in Thailand through mutual exchange agreements. It is grounded in the authority provided by the Geographical Indications Protection Act B.E. 2546 (2003), specifically referencing Sections 4, 9, 10, 15, 16, 18, and 19.

The ministerial regulation applies exclusively to GI registrations conducted under international agreements where Thailand and its counterpart mutually recognize and exchange lists of registered GIs. It also covers cases where such agreements are already binding but require additional GI registrations.

red and blue plastic pack

Key Provisions:

1. Definitions and Applicability

  • “Application” refers to a request for GI registration submitted under an international agreement.
  • “International Agreement” includes treaties or arrangements where GI protection is a key component.
  • The ministerial regulation becomes effective from the date specified in the Royal Gazette.

2. Application Process:

  • Applications must be submitted electronically via the DIP’s system or designated email.
  • Required information includes:
    • Name of the GI
    • Product category
    • Applicant details
    • Country of origin
    • Product description
    • Geographical area definition
    • Link between the product and its geographical origin
  • Applications may be submitted in Thai or English, with Thai translations for key sections if submitted in English.
  • No application fee is required under this ministerial regulation.

3. Publication and Opposition:

  • Accepted applications will be published with detailed information including registration number, product details, and origin.
  • Oppositions must be submitted electronically, and applicants may respond through designated formats.

4. Registration and Record-Keeping:

  • Registration numbers will be issued from the date the international agreement takes effect.
  • The GI registry will include comprehensive details about the product, origin, and geographical linkage.

5. Appeals and Dispute Resolution:

  • Applicants may appeal decisions through a representative residing in Thailand.
  • Appeals are submitted to the Geographical Indication Committee.

6. Unsuccessful Negotiations:

  • If international negotiations fail, the application is considered withdrawn, and relevant parties are notified.

7. Communication Protocol:

  • All official correspondence will be routed through the negotiating partner.
  • After 30 days of dispatch, communications are deemed received unless related to appeals.

Implications for Stakeholders:

This ministerial regulation simplifies and formalizes the process for foreign GI registration in Thailand, promoting transparency and efficiency. It also aligns Thailand’s GI framework with international standards, potentially boosting trade and protecting cultural heritage.

Producers, exporters, and legal representatives involved in GI products should closely review the draft and consider submitting comments to ensure their interests are represented.

Key Takeaways:

  • Stakeholders are encouraged to participate in the public consultation to shape the final version of ministerial regulation.
  • Thailand is introducing a structured process for registering foreign GIs under international agreements.
  • Applications are streamlined, fee-exempt, and submitted electronically.
  • The regulation enhances transparency in publication, opposition, and appeals.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand’s BOI 2025: Driving Sustainability and Local Content in EVs and Industry through Strategic Incentives

Thailand’s Board of Investment (BOI) is advancing transformative policies to modernize the nation’s economy by promoting sustainability, enhancing local value creation, and strengthening global competitiveness. At its meeting on June 27, 2025, chaired by the Deputy Prime Minister, the BOI approved three key strategic initiatives:

1. Promotion of Local Content Utilization

To promote and increase the utilization of local content in the electric vehicle (EV) and electrical appliance industries, the projects that satisfy the following local content thresholds will be eligible for an additional 50% reduction in corporate income tax (CIT) for a period of two years under this scheme:

  • BEVs and Electrical Appliances: The use of local components must exceed 40% of the total component value.
  • PHEVs: Local content must exceed 45% of the total component value.
  • EV Parts: Local raw materials usage must exceed 15% of the total raw material value.

In all cases, the products must be certified as “Made in Thailand” (MiT) by the Federation of Thai Industries (FTI).

2. Improvement of Conditions for Light Industrial Businesses and Certain Activities with Environmental Impacts

To ensure fair competition and support the development of domestic industries, the BOI has introduced new regulations requiring certain manufacturing sectors—specifically, the production of furniture and components, bag manufacturing, and printing—to maintain a minimum of 51% Thai ownership. This requirement does not apply to the projects located within Special Border Economic Zones.

In parallel, to reinforce environmental protection and community well-being, the BOI has strengthened regulatory conditions for industries identified as having significant environmental or social impacts. These include, but are not limited to, metal processing, chemical manufacturing, and industrial plastics production. The projects in these categories will no longer be eligible for land ownership rights and must be situated within designated industrial estates, which are subject to heightened regulatory oversight. These revised conditions will apply to all applications submitted on or after September 1, 2025.

factory worker reading the manual

3. Comprehensive Monitoring and Tracking of All Stages of the Investment Promotion Process

To strengthen enforcement, the BOI has established a “Special Audit Team” to closely monitor that projects at risk of violating conditions or misusing incentives. High-risk sectors under special scrutiny include tire manufacturing, solar cells, metal products, bags, and furniture.

Major Project Approvals

The BOI has approved two major projects worth a combined THB 28.64 billion which are a Tier 3 Data Center by Stratus Technology in Rayong (THB 23.69 billion), and an expansion of air transportation services by Thai VietJet Air (THB 4.96 billion), featuring six new aircraft to boost Thailand’s role as a regional aviation hub.

Conclusion

By combining significant infrastructure investments with local content incentives and targeted tax relief, the BOI is guiding Thailand toward sustainable industrial growth focused on domestic value creation and supply chain strengthening. As the BOI evolves from gatekeeper to integrator of investment flows, businesses and legal advisers must closely align with its updated compliance and certification requirements to capitalize on these strategic opportunities.

Author: Panisa Suwanmatajarn, Managing Partner.

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The Ripple Effect EP. 8: Thailand Faces 36% U.S. Tariff — Official Notice and Response

The United States has recently revised its trade policy by announcing significant increases in tariff rates on imports from multiple countries, including Thailand. Under these new measures, Thai exports to the United States will be subject to a 36% tariff rate.

Initially, the U.S. President granted a 90-day postponement of the enforcement date, extending the deadline to July 9, 2025. This grace period was intended to provide affected countries with an opportunity to engage in negotiations and submit formal requests for tariff relief.

In response, Thailand dispatched a high-level delegation to the United States and submitted an official proposal for tariff reconsideration in June 2025. Despite these efforts, on July 7, 2025, the U.S. government issued an official letter confirming that Thailand’s tariff rate would remain at 36%. The new enforcement date has been set for August 1, 2025. Notably, while several other countries succeeded in securing reduced tariff rates during the negotiation period, Thailand’s rate remains unchanged from the initial announcement.

Thailand’s Diplomatic Efforts and Regional Comparison in the 2025 Tariff Negotiations

Following the initial announcement, the Thai government promptly established a negotiation team to advocate for Thailand’s position and mitigate potential economic harm. However, despite these efforts, the negotiations did not result in any modification of the imposed rate.

Compared to neighboring Southeast Asian countries, Thailand’s outcome is notably unfavorable. Vietnam successfully negotiated a tariff reduction from 46% to 20%. Cambodia secured partial reductions on selected goods, while Laos and Myanmar obtained cuts from 48% to 44%. Indonesia’s negotiations remain ongoing. Malaysia did not achieve any reductions and continues to face a 25% tariff, which is still lower than Thailand. The Philippines and Singapore benefit from significantly lower rates of 17% and 10%, respectively. Vietnam’s result is widely regarded as the most favorable in the region.

a person s hand holding a pen near a piece of paper

Economic Impact and the Thai Government’s Response

The economic repercussions of this development have raised significant concerns. Analysts project that Thai exporters will be adversely affected—particularly in key sectors such as electronics, automotive components, and food processing. The continued enforcement of the tariff is expected to result in a contraction of GDP growth by approximately 0.5 to 0.7 percentage points in the second half of 2025.

In response, on July 9, 2025, the Thai government announced a comprehensive plan aimed at mitigating the impact of the new tariff. The plan includes measures to strengthen cooperation within ASEAN, diversify trade partnerships, and provide targeted support to businesses affected by the tariff imposition.

Conclusion

Thailand’s inability to secure tariff relief in the 2025 U.S. trade negotiations represents a significant missed opportunity and raises critical questions regarding the effectiveness of the country’s trade diplomacy. While others in the region succeeded in obtaining valuable concessions, Thailand’s unchanged position risks undermining its export competitiveness in the near term.

Although the government has announced a plan emphasizing regional cooperation and trade diversification, the success of these initiatives will largely depend on the rigor and speed of their implementation. The coming months will be pivotal in determining whether Thailand can recover lost ground and effectively recalibrate its trade strategy to navigate the shifting dynamics of the global economic landscape. Business operators should closely monitor the government’s implementation of these measures.

Author: Panisa Suwanmatajarn, Managing Partner.

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