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

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

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

Key Tax Measures:

1. Tax Incentives for Purchasing Artworks

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

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

•  Eligible Artworks: Artworks must be purchased from

       •  National Artists in the field of visual arts;

       •  Silpathorn Artists in the field of visual arts;

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

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

•  Documentation Requirements: Taxpayers must provide:

       •  A full tax invoice or receipt; or

       •  Documentation describing the artworks.

2. Tax Support for Artists:

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

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

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

Implementation and Oversight:

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

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

Conclusion:

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

Key Takeaways:

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

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

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

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

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

Author: Panisa Suwanmatajarn, Managing Partner.

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

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

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

The Challenges Before Digitalization

Prior to this launch, taxpayers encountered significant obstacles:

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

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

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

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

red dot lights on black surface

A Fully Integrated Digital Platform

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

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

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

Strategic Benefits for Businesses

The new system delivers tangible operational advantages to businesses:

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

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

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

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

Conclusion

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

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

Author: Panisa Suwanmatajarn, Managing Partner.

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

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

Redefining “Hotel” as “Accommodation”

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

Categorization of Accommodations

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

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

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

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

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

Streamlining Business Operations

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

Addressing Gaps in Current Legislation

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

Key Takeaways

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

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

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

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

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

Author: Panisa Suwanmatajarn, Managing Partner.

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

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

Economic Stimulus Budget Framework

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

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

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

Strategic Priorities for Fund Reallocation

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

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

U.S. Trade Relations Context

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

Partnership Talks for Sustainable Growth

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

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

Conclusion

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

Author: Panisa Suwanmatajarn, Managing Partner.

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New Tax Framework for Foreign-Sourced Income: Thailand’s Draft Decree Explained

The taxation of foreign-sourced income has emerged as a pivotal issue within Thailand’s tax system, particularly as increasing numbers of Thai individuals engage in overseas employment, investment, and asset holdings. The government seeks to achieve a delicate balance between closing tax loopholes and incentivizing the repatriation of overseas funds to stimulate domestic economic growth.

Historical Framework

Under the previous Revenue Department Order No. GorKhor 0802/696, dated 1 May 1987, foreign-sourced income remained exempt from Thai personal income tax provided it was brought into Thailand in a tax year different from the year in which it was earned. This provision enabled many individuals to legally defer the remittance of foreign income, thereby avoiding immediate taxation obligations.

Current Regulatory Changes

Effective 1 January 2024, the aforementioned provision was repealed by Revenue Department Order No. Por.161/2566. Under this regulation, individuals classified as Thai tax residents, those residing in Thailand for more than 180 days within a calendar year, are now obligated to pay personal income tax on foreign-sourced income if such income is remitted to Thailand, regardless of the calendar year it is earned. The applicable personal income tax rates for this remitted foreign income range progressively from 5% to 35%, determined by the total taxable amount.

Unintended Consequences and Policy Response

While Revenue Department Order No. Por.161/2566 was enacted to enhance tax transparency and align Thailand’s tax framework with international standards, including those established by the OECD, it has generated an unintended consequence. Many Thai individuals earning foreign-sourced income have opted not to remit such funds to Thailand due to concerns regarding potentially substantial tax burdens.

In response to these matters, the Revenue Department is currently drafting a new Royal Decree (hereinafter referred to as “the Draft“) designed to address these conditions.

person holding dollar bills while using a calculator

Key Proposed Provisions

The Draft includes the following principal proposals:

  • Tax Exemption Extension: Personal income tax exemption will apply to foreign-sourced income remitted to Thailand within one to two years from the year it was earned. If remitted after that, the income tax will be applied.
  • Elimination of Same-Year Requirement: The current requirement mandating income remittance within the same calendar year it was earned will be removed.

This revised approach aims to provide taxpayers with enhanced flexibility in managing financial transactions, such as year-end dividend payments, while serving as a positive incentive for overseas Thais to repatriate funds for domestic investment across capital markets, business enterprises, and real estate sectors.

Current Status and Implementation Considerations

While the Draft represents a promising policy development, it has not yet been formally enacted and enforced. Uncertainty remains regarding whether the new provisions will apply retroactively to income remitted to Thailand during 2024.

Until formal enactment occurs, timing remains a critical consideration. Remitting income outside the anticipated grace period may result in taxation under current regulations.

Conclusion

The recent policy initiative by the Thai government reflects a broader strategic objective to incentivize, rather than penalize, the repatriation of foreign-sourced income. This approach serves dual purposes—reducing the tax burden on individuals earning income abroad while acting as a catalyst for attracting capital back into the domestic economy. Should the Draft be formally enacted and enforced, it will communicate a clear and positive message to overseas Thai nationals that repatriating funds will no longer entail prohibitive tax costs.

The success of this policy framework will ultimately depend on its implementation details and the government’s ability to balance revenue generation with economic stimulus objectives.

Author: Panisa Suwanmatajarn, Managing Partner.

Source: International Comparison August 2025: Antea

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Thai Government Policy Response to Recent U.S. Tariff Measures

Following the United States government’s official announcement imposing a 19% import tariff on Thai goods effective August 1, 2025, the Thai government has developed a comprehensive policy framework to mitigate economic impacts. This multi-pronged approach encompasses financial support mechanisms, fiscal policy adjustments, and targeted business assistance programs designed to maintain Thai export competitiveness in the U.S. market while ensuring economic stability throughout this transition period.

U.S. Trade Policy Changes

General Tariff Implementation

The United States has implemented a 19% import tariff on Thai goods, effective August 1, 2025, representing a significant shift in bilateral trade relations.

Copper Products Tariff Structure

Concurrently, the U.S. has imposed a 50% import tariff on copper products from all countries, effective August 1, 2025. This comprehensive measure applies to:

  • Semi-finished copper products
  • Goods with high copper content
  • Copper pipes, wires, rods, and cables
  • Copper connectors and electronic components

The tariff excludes copper scrap, imported raw copper materials, and refined copper—essential components of the global supply chain. These exemptions have precipitated a significant decline in copper prices, resulting in substantial losses for traders who had accumulated inventory in anticipation of increased demand.

Government Response Measures

Immediate Business Support Initiatives

Tax Relief Programs

  • Strategic tax incentives including deductions and credits
  • Reduced corporate income tax rates
  • Targeted relief measures to facilitate business adaptation during the tariff transition

Soft Loan Program

  • Allocation of a minimum of 200 billion baht through state financial institutions
  • Distribution via commercial banking networks
  • Designed to maintain business liquidity and operational continuity

Government Subsidies

  • Competitiveness enhancement funding administered by the Board of Investment (BOI)
  • Targeted support for strategic industries
  • Focus on maintaining competitive positioning in global markets

Cabinet-Approved Economic Stimulus

The Cabinet has authorized two major stimulus initiatives, totaling 18.5 billion baht, specifically designed to:

  • Strengthen national economic competitiveness
  • Provide enhanced student loan support programs

Institutional Support Framework

Export Support Infrastructure

On August 7, 2025, the Ministry of Commerce established a One-Stop Service Center at the Export Center, providing:

  • Comprehensive consultation services
  • Advisory support for affected businesses
  • Problem-solving assistance for both SMEs and large corporations
  • Export facilitation and promotional activities

EXIM Bank Financial Relief Package

The Export-Import Bank of Thailand has implemented comprehensive financial support measures including:

Liquidity Enhancement Programs:

  • Extended repayment terms up to 365 days to alleviate cash flow pressures
  • Interest rate reductions of up to 20% for existing and new loan facilities
  • Pre and post-export revolving credit facilities providing low-interest working capital

Specialized Financing Solutions:

  • Pre-emptive principal repayment holidays extending up to one year for qualifying long-term borrowers
  • Transformation loans starting at 2.75% interest for production upgrades and automation initiatives
  • Post-shipment working capital loans with export insurance (EXIM Safe Trade) providing protection against buyer default

Market Diversification Support:

  • Trade Fair Participation Loans (EXIM Department of International Trade Promotion Empower Financing) for overseas market exploration
  • SME support loans in partnership with the Social Security Office, starting at 2.00% interest, to maintain employment levels and operational stability

Strategic Outlook

The implementation of restrictive U.S. trade measures presents substantial challenges for Thai export sectors. While the Thai government has initiated comprehensive mitigation strategies, ongoing monitoring and assessment of their effectiveness remains critical. In an increasingly volatile global trade environment, Thailand must maintain agility, proactive policy development, and adaptive capacity to preserve its competitive position in evolving international markets.

The success of these measures will largely depend on their implementation efficiency, private sector engagement, and the ability to identify and capitalize on alternative market opportunities while maintaining strong bilateral relationships with key trading partners.

Author: Panisa Suwanmatajarn, Managing Partner.

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

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

Legislative Framework and Approval

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

OECD Alignment and Global Minimum Tax Response

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

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

Qualified Refundable Tax Credit Structure

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

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

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

Enhanced Startup Support Framework

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

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

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

Ownership and Control Requirements

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

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

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

Strategic Implications and Outlook

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

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

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

Author: Panisa Suwanmatajarn, Managing Partner.

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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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