Tag: Tax

on by

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

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

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

Current Regulatory Framework

Under existing rules:

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

Rationale for the Draft Rules

The proposed amendments are intended to:

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

Key Features of the Draft Rules

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

1. Transactions Conducted Through Commercial Banks

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

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

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

B. Certain High-Risk Inbound Transactions

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

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

C. Digital Asset-Related Proceeds

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

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

2. Transactions Conducted Through Non-Bank Operators

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

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

B. Digital Asset-Related Proceeds

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

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

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

Potential Impacts

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

Conclusion

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

Author: Panisa Suwanmatajarn, Managing Partner.

Source: International Business April 2026 : Antea

Read Full Article

on by

Thailand’s Proposed Updates to the Non-Preferential Certificate of Origin Framework for Exports to the United States and the European Union

The Department of Foreign Trade (DFT) is conducting a public hearing from 1 April to 15 April 2026 on a draft notification concerning the verification of product origin for the issuance of Non-Preferential Certificates of Origin (“C/O“) for exports to the United States and the European Union (the “Draft Notification“).

The Draft Notification seeks to strengthen the criteria, procedures, and verification mechanisms governing origin certification for surveillance goods in relation to C/O issuance, in alignment with prevailing international trade measures. Key objectives include reinforcing monitoring systems, enhancing inter-agency coordination, and improving the verification of high-risk goods. These measures are intended to address risks of transshipment, origin misrepresentation, and evasion of anti-dumping duties and elevated tariffs, as well as to prevent circumvention of trade measures through the misuse of C/Os in customs declarations.

Key Principles and Implementation Framework

The Draft Notification introduces a mandatory origin verification mechanism for exporters seeking to obtain C/Os for surveillance goods destined for the United States and the European Union. Under this framework, exporters intending to declare Thai origin to foreign customs authorities via a C/O are required to undergo prior origin verification of the goods with the DFT. This requirement applies to goods listed in the annex as surveillance products, comprising 9 product groups for exports to the EU and 67 product groups for exports to the United States, all of which are subject to trade measures due to risks of origin misrepresentation.

1. Verification Procedure

Exporters must submit an application for origin verification through the DFT’s electronic system, together with relevant information and supporting evidence pertaining to the production process. The DFT will assess the origin qualifications of the goods and communicate the verification results through the same system. The results will serve as supporting evidence for subsequent C/O applications and will remain valid for a period of two years.

2. Enforcement

To monitor and enforce compliance with the mechanism, the DFT is empowered to conduct on-site inspections of business premises, production facilities, and storage locations where doubt arises regarding the production process — whether before or after the issuance of a verification result — in order to verify adherence to the applicable rules of origin.

3. Revocation

The DFT is further empowered to revoke a verification result where it is established that goods have been falsely declared as originating from Thailand through the use of a C/O, or where changes in production or export information result in non-compliance with the relevant rules of origin. In such cases, the revoked verification result may no longer be relied upon for future C/O applications.

Conclusion

The Draft Notification represents a significant tightening of Thailand’s non-preferential certificate of origin regime, particularly with respect to high-risk export categories. By introducing a mandatory pre-verification mechanism supported by electronic processing, enhanced inspection powers, and revocation authority, the DFT aims to strengthen the integrity of origin certification and ensure greater compliance with international trade rules. If implemented, the measure is expected to increase regulatory scrutiny for exporters while simultaneously enhancing the credibility and transparency of Thai export documentation in key markets, namely the United States and the European Union.

Key Takeaways

The primary objective is to prevent origin misrepresentation and circumvention of trade measures.

Mandatory origin verification is required prior to the issuance of non-preferential C/Os for exports to the United States and the European Union.

The requirement applies to surveillance goods across 9 EU product groups and 67 US product groups.

Applications are submitted and processed through an electronic system, with verification results valid for two years.

The DFT retains authority to conduct on-site inspections and revoke verification results where warranted.

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles

on by

Thailand Plans to Reform Excise Tax System to Increase Revenue

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

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

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

Plan to Increase Excise Tax Revenue

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

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

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

Proposed Reform of Cigarette Excise Tax

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

1. Ad Valorem Tax (Based on Retail Price)

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

2. Specific Tax (Based on Quantity)

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

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

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

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

Automobile Excise Tax Changes

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

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

Key changes include:

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

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

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

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

Other Potential Excise Tax Measures

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

These potential measures may include:

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

Conclusion

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

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

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

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles

on by

Liquor Import: Draft Ministerial Regulation to Modernize Liquor Import Framework and Support Tourism Sector

On 3 February 2026, the Thai Cabinet approved in principle the draft Ministerial Regulation on Permission to Import Liquor into the Kingdom (amending the Ministerial Regulation B.E. 2560 [2017], as amended by Ministerial Regulation No. 2 B.E. 2562 [2019]), as proposed by the Ministry of Finance through the Excise Department.

The primary purpose of this amendment is to update and rationalize the regulatory regime governing liquor imports. The existing framework has imposed certain procedural and substantive limitations that hinder legitimate business activities and complicate excise tax administration under the licensing system. The revision seeks to streamline procedures, remove unnecessary legal obstacles, facilitate importers, strengthen tax oversight through digital tools, and align the regime with national policies to promote tourism by enhancing product diversity, stimulating tourist spending, and creating greater economic value in the sector, consistent with the Cabinet resolution dated 28 November 2023.

The draft regulation introduces four substantive amendments:

1.  Clarification and Strengthening of Type 5 Import License Provisions
The amendment grants the Director-General of the Excise Department explicit authority to define detailed criteria, procedures, and permitted purposes for Type 5 licenses (covering imports not falling under Types 1–4). This resolves previous ambiguity that allowed broad interpretation and potential misuse.
Initial categories to be specified include importation for re-export, use as raw material or component in non-liquor industries, importation as non-commercial samples or for personal consumption (limited to 200 litres per occasion), and importation of rectified spirit for industrial production of plant-based ethylene.

2.  Abolition of the Sole Agent Requirement for Type 1 Import Licenses
The previous condition requiring Type 1 license applicants (import for sale, excluding duty-free retail under customs law) to be the exclusive agent of the imported brand is removed. This change enables multiple importers to handle the same brand, thereby fostering greater competition.
The relaxation will initially apply only to wine and sparkling wine. The Director-General retains discretion to reimpose the sole agent condition for other liquor categories if warranted. The Excise Department’s Imported Liquor Price Database system now provides reliable price benchmarking, valuation, and smuggling detection capabilities, rendering the sole agent mechanism less essential for tax control.

3.  Introduction of Electronic Submission Channels
Applications for import licenses may now be filed either in person at the appropriate Excise Area Office or Branch Office (corresponding to the Customs clearance location) or electronically via designated digital platforms. This dual mechanism significantly improves administrative efficiency and accessibility for importers.

4.  Simplification of Label Submission Requirements (Type 1 Licenses)
The mandatory prior approval of container labels before applying for a Type 1 license has been eliminated. Importers are now required only to submit sample labels that fully comply with the criteria and content specifications announced by the Director-General of the Excise Department. This reduction in procedural burden is supported by the department’s established electronic label verification infrastructure.

The Ministry of Finance has confirmed that the amendments do not alter excise tax rates or taxable bases; accordingly, no reduction in state revenue is anticipated. The revised system is expected to enhance tax collection effectiveness and further curb illicit importation.

The proposal was subject to public hearing and received concurrence in principle from relevant ministries and agencies, including Tourism and Sports, Commerce, Public Health, Industry, and the Office of the National Economic and Social Development Council. The Council of State has advised that the Cabinet possesses the authority to approve the draft in principle, as the matter constitutes routine regulatory adjustment and does not impose binding obligations on future administrations pursuant to Section 169 (1) of the Constitution.

Key Takeaways:

•  The regulation modernizes Thailand’s liquor import licensing regime by removing outdated restrictions and integrating digital processes.

•  Elimination of the sole agent requirement (initially for wine and sparkling wine) promotes fairer market competition and greater product availability.

•  Enhanced administrative efficiency through electronic applications and simplified label procedures reduces burdens on legitimate importers.

•  Fiscal neutrality is preserved; no tax rate reductions are involved, while improved oversight is expected to strengthen revenue collection and reduce smuggling.

•  The measure directly supports national tourism objectives by facilitating greater variety and accessibility of imported alcoholic beverages, thereby encouraging tourist expenditure and sector growth.

•  Upon publication in the Royal Gazette, the amended regulation will enter into force, marking a structured step toward a more competitive, transparent, and tourism-aligned import framework.

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles

on by

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

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

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

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

Key Legal Framework

The incentive is implemented under the following key regulations:

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

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

Eligibility Requirements for the CIT Incentive

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

1. Qualifying Investment Period

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

2. Qualifying Large EVs

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

(a) Vehicle Type

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

(b) Asset Conditions

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

(c) No Overlapping Tax Incentives

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

Applicable CIT Deduction Rate

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

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

Key Benefits and Limitations

Benefits

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

Limitations

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

Conclusion

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

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

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles

on by

Thailand’s New Import Duty Framework for Low-Value Goods: A Policy Shift Toward Competitive Neutrality

On 4 December 2025, the Thai Customs Department issued Customs Notification No. 219/2568 (2025), introducing significant reforms to Thailand’s import duty regime for low-value goods (LVGs). This measure eliminates the long-standing import duty exemption for LVGs as part of a broader policy initiative to address competitive imbalances between imported and domestically supplied goods and to restore tax neutrality in the Thai market. The Notification took effect on 1 January 2026 and remains in force until superseded by subsequent regulation.

Legal Background: Evolution of Import Duty Rules for LVGs

Historically, LVGs were exempt from import duty under Customs Notification No. 191/2561 (2018), which granted duty-free treatment for imported goods with a customs value not exceeding THB 1,500. This exemption was originally designed to reduce administrative burdens associated with customs clearance of small-value shipments.

However, the rapid expansion of cross-border e-commerce has resulted in LVGs being imported into Thailand on a substantial commercial scale, often in direct competition with domestically supplied goods. Over time, the exemption increasingly deviated from its original administrative rationale and raised concerns regarding fair competition and unequal tax treatment.

This measure was expressly temporary and applied only until 31 December 2024, after which the exemption regime reverted to the framework established under Notification No. 191/2561 (2018).

To establish a more sustainable policy framework, the Customs Department subsequently issued Customs Notification No. 219/2568 (2025), which formally repealed Customs Notification No. 191/2561 (2018). Consequently, the previous import duty exemption for LVGs has been fully revoked and is no longer in effect.

Current Import Duty Framework for LVGs

Under Customs Notification No. 219/2568 (2025), the following provisions now apply:

  • Imported goods with a customs value of less than THB 1 remain exempt from import duty.
  • Imported goods with a customs value of THB 1 or more are subject to import duty in accordance with the applicable tariff classification under Thailand’s customs tariff schedule.

Anticipated Benefits

  • Enhanced competitive equity: Domestic businesses, particularly small and medium-sized enterprises (SMEs), benefit from more equitable market conditions, as imported goods are now subject to import duty treatment comparable to locally supplied goods.
  • Improved tax neutrality: The revised framework reduces disparities in tax treatment between imported and domestically supplied goods, promoting a more level playing field.
  • Strengthened customs enforcement: These changes enhance customs oversight of large-scale commercial imports previously classified as low-value shipments, improving revenue collection and trade compliance.

Potential Challenges

  • Increased costs for cross-border sellers and consumers: Goods previously imported duty-free may now incur import duties, resulting in higher overall costs for end consumers and cross-border merchants.
  • Enhanced compliance obligations: Overseas sellers and e-commerce platforms face additional customs formalities and documentation requirements, potentially increasing operational complexity.
  • Administrative burden: The shift may require significant adjustments to existing logistics and compliance infrastructure.
  • Practical and Operational Implications
  • Pricing adjustments: Importers, logistics providers, and e-commerce platforms should revise their pricing structures to reflect increased exposure to import duties and maintain competitive positioning.
  • Process and system updates: Customs declarations, tariff classifications, and internal compliance systems require comprehensive review and updates to ensure alignment with the new regulatory framework.
  • Transitional considerations: Market participants may experience temporary operational adjustments and should implement appropriate change management procedures to facilitate smooth adaptation to the new regime.

Future Policy Considerations

In addition to the revised import duty framework, the Customs Department has indicated interest in simplifying the import duty structure for LVGs through the application of a single, uniform duty rate rather than multiple rates determined by product tariff classification. From a policy perspective, preliminary discussions suggest that collecting import duties on LVGs at an average rate of approximately 10% may be insufficient to achieve meaningful competitive balance. A higher rate—potentially in the range of 30%—has been discussed as more likely to establish parity between domestic and foreign businesses.

However, under the current caretaker government, the Customs Department lacks the authority to issue emergency decrees to amend the customs tariff schedule. Consequently, any modifications to duty rates or tariff structures will require legislative action following the formation of a new government.

Conclusion

The new import duty framework for low-value goods represents Thailand’s strategic policy response to the rapid growth of cross-border e-commerce and reflects a clear commitment to competitive fairness and tax neutrality. While these changes may result in increased costs and compliance obligations for certain overseas sellers and importers, they also strengthen customs enforcement capabilities and create more equitable conditions for domestic businesses.

Businesses engaged in importing goods into Thailand should conduct comprehensive reviews of their pricing strategies, customs classifications, and logistics and compliance processes to ensure ongoing adherence to the new regulatory framework. Early preparation and proactive adaptation will be essential to maintaining operational efficiency and market competitiveness under the revised regime.

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles

on by

Thailand Issues Key Top-Up Tax Guidance: Exchange Rates, Exempt Entities, and Special Cases

Thailand enacted the Emergency Decree on Top-Up Tax B.E. 2567 (2024) (the “Emergency Decree“), which applies to large multinational enterprises (MNEs) whose total consolidated revenue, as reported in the consolidated financial statements of the ultimate parent entity (UPE), equals or exceeds EUR 750 million (or the Thai Baht equivalent). This legislation subjects in-scope MNEs to a top-up tax at a 15% global minimum tax rate for accounting periods commencing on or after 1 January B.E. 2568 (2025).

To support the implementation of the Emergency Decree with clarity and ensure practical enforceability, the Director-General of the Revenue Department issued three items of secondary legislation (the “Notifications“). These Notifications were issued on 24 December B.E. 2568 (2025) and published in the Royal Gazette on 13 January B.E. 2569 (2026). The Notifications apply for purposes of determining top-up tax liability for accounting periods commencing on or after 1 January B.E. 2568 (2025).

Key Provisions of the Secondary Legislation

1. Notification of the Director-General of the Revenue Department on Top-Up Tax (No. 6): Exchange Rate Conversion Standards

The top-up tax calculation is based on the financial information of MNE groups, which generally conduct operations using foreign currencies as their principal currencies. Consequently, establishing clear and standardized exchange rate rules is essential for accurate top-up tax computation.

This Notification prescribes exchange rate criteria for converting foreign currency amounts into Thai Baht under the Emergency Decree, ensuring consistency and uniformity in top-up tax calculations. The key provisions include:

Conversion for Tax Calculation Purposes

When the law prescribes criteria or conditions requiring consideration of figures from financial statements or calculation of top-up tax for an entity or group of entities stated in foreign currency, and such amounts must be converted to Thai Baht for a particular accounting period, the conversion shall utilize the average rate between the buying rate and selling rate for the month of December preceding that accounting period, as calculated by the Bank of Thailand.

Payment and Refund of Top-Up Tax

Regardless of which foreign currency is used as the principal currency in the operations of an entity or its group entities, any payment or refund of top-up tax in Thailand shall be made exclusively in Thai Baht. The conversion shall be calculated using the average rate between the buying rate and selling rate of commercial banks, as calculated by the Bank of Thailand on the last business day preceding either the date of tax payment or the date on which the competent authority approves the tax refund, unless otherwise exempted.

2. Notification of the Director-General of the Revenue Department on Top-Up Tax (No. 7): Excluded Entity Characteristics

Pursuant to Section 26 of the Emergency Decree, constituent entities (CEs) located in Thailand that are members of an MNE group whose total consolidated revenue, as reported in the consolidated financial statements of the UPE, equals or exceeds EUR 750 million (or the Thai Baht equivalent) for at least two accounting periods within the four accounting periods prior to the current accounting period, are subject to top-up tax.

However, Section 27 provides that certain categories of CEs are exempt from being treated as CEs subject to top-up tax. These exemptions apply to:

  1. Government agencies
  2. International organizations
  3. Non-profit organizations
  4. Pension funds
  5. Investment funds that are UPEs
  6. Real estate investment vehicles that are UPEs
  7. Other entities as may be prescribed by Royal Decree

To prevent overly broad interpretation of these exemptions, this Notification clearly and specifically prescribes the characteristics and qualifications of each entity type that does not constitute a CE, thereby establishing which entities fall outside the scope of top-up tax liability.

3. Notification of the Director-General of the Revenue Department on Top-Up Tax (No. 8): Special Calculation Rules for Entities with Specific Characteristics

This Notification prescribes specific criteria, procedures, and conditions for determining top-up tax liability applicable to CEs with the following characteristics:

  1. Constituent entities in which the UPE holds a minority interest
  2. Stateless constituent entities
  3. Investment entities, including insurance investment entities with liabilities arising from insurance contracts or life insurance annuity contracts

These entities possess legal forms, organizational structures, complex ownership structures, or operational modes that are distinct from other CEs, rendering the general rules under the Emergency Decree inappropriate for direct application. Accordingly, this Notification clearly prescribes specific methodologies and conditions for determining:

  • The scope of income
  • The aggregation of income
  • The allocation of profits or losses
  • Calculation methodologies

These provisions ensure that top-up tax collection is conducted accurately and fairly, properly reflecting the effective tax rate (ETR).

Separate Calculation Requirement

The calculation of ETR and top-up tax for CEs with these specific characteristics shall be conducted separately from other CEs within the MNE group. Furthermore, in certain cases, items and amounts included in the computation of ETR and top-up tax for entities with specific characteristics shall not be included in the computation of ETR and top-up tax for other CEs within the MNE group.

Legal Status and Hierarchy

These Notifications are issued pursuant to the authority granted under the Emergency Decree. They establish criteria and procedures for practical enforcement and support the implementation of the Emergency Decree. The Notifications apply consistently with the Emergency Decree, provided they do not conflict with other existing or future secondary legislation, such as Royal Decrees or Ministerial Regulations, which may be issued to prescribe further details in accordance with standards established by the Organization for Economic Co-operation and Development (OECD). Accordingly, stakeholders must continuously monitor further developments.

Key Considerations for Stakeholders

1. Application of Prescribed Exchange Rates

MNEs subject to top-up tax must apply the exchange rates prescribed under the relevant Notification when converting foreign currency amounts into Thai Baht to ensure uniform standards for tax computation. The amount of tax payable may vary based on prescribed exchange rates. However, such enterprises are afforded sufficient time to ascertain applicable criteria in advance of the accounting period commencement.

2. Documentation Requirements for Specific Constituent Entities

Constituent entities in which the UPE holds a minority interest, entities with complex ownership structures, stateless constituent entities, and investment entities whose ETR may not accurately reflect actual tax burdens must prepare comprehensive and detailed supporting documentation. Such information should include, but is not limited to:

  • Investment income details
  • Ownership and control structures
  • Asset management arrangements
  • Relevant financial statements

This documentation should support the assessment of whether top-up tax computation should be performed according to general rules or whether the application of specific rules, methodologies, or conditions prescribed by the relevant Notification is required.

Conclusion

The Emergency Decree has been designed to align with the OECD Global Anti-Base Erosion Rules. These Notifications are essential to demonstrate Thailand’s commitment to implementing top-up tax in accordance with OECD-prescribed standards while safeguarding Thailand’s rights and interests in top-up tax collection. Therefore, these Notifications should be considered and applied in conjunction with the Emergency Decree to enable CEs subject to top-up tax to calculate their obligations accurately and minimize interpretative gaps that could otherwise be exploited to avoid top-up tax liability.

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles

on by

Thailand’s Proposed VAT Increase: Legal and Policy Overview

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

Background of Thailand’s VAT System

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

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

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

The Ministry of Finance’s Proposed VAT Plan

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

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

Support Measures for Vulnerable Groups

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

Impacted Stakeholders and Economic Sectors

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

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

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

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

Current Status

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

Conclusion

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

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles

on by

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

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

Background and Rationale:

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

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

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

Key Amendments: Electronic Classified Information

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

•  Classification and marking of electronic documents.

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

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

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

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

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

Expected Benefits:

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

Next Steps:

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

Comparison with International Standards:

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

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

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

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

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

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

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

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles

on by

Tax Obligations and Compliance for Foreign Residents in Thailand

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

Tax Residency and Taxable Income in Thailand:

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

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

Tax Return Filing Requirements:

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

Deductions and Allowances:

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

Double Taxation Agreements (DTAs) and Tax Credits:

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

Penalties for Non-Compliance:

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

Conclusion:

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

Source: International Comparison December 2025: Antea

Read Full Article