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Thailand : Tax Exemption of Dividend

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

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

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

Source: International Comparison July 2025: Antea

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

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

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

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

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

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

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

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

Economic Impact and the Thai Government’s Response

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

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

Conclusion

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

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

Author: Panisa Suwanmatajarn, Managing Partner.

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Closing Nominee Loopholes: Thailand’s Legal Reform to Safeguard Property Ownership

On 24 June 2025, the Cabinet formally acknowledged the “Findings and Recommendations of the Ombudsman Regarding the Ownership or Possession of Land or Real Estate by Nominees Acting on Behalf of Foreigners.” These recommendations were submitted in response to growing concerns over the circumvention of land ownership laws by foreign nationals through the use of Thai nominees.

This initiative follows the discovery of widespread land and property acquisitions by foreign nationals, raising significant concerns regarding national security, economic stability, and equality of opportunity for Thai citizens. In numerous instances, foreigners have circumvented legal restrictions by utilizing Thai nominees to bypass requirements such as marriage to Thai citizens, land ownership through Thai children, long-term leases, and company structures that disguise actual control.

One prevalent mechanism involves establishing a Thai-registered legal entity that appears to be locally owned but is ultimately controlled by foreign interests through nominee shareholders or preference shares. This practice not only undermines the intent of existing legislation but also contributes to rising land prices, thereby reducing accessibility for Thai nationals—particularly in high-demand areas such as Bangkok and Chiang Mai.

Key Recommendations

1. Department of Business Development (DBD)

The DBD has been designated to play a central role in preventing and monitoring nominee arrangements, particularly in legal entities with foreign shareholding:

  1. System Development
  • Developing an AI-driven system to process and analyze corporate data to identify high-risk juristic persons potentially acting as nominees.
  1. Amendment to the Foreign Business Act B.E. 2542 (1999) (FBA) to include:
  • A broader definition of “foreigner” to encompass those exercising control or management through Thai nominees.
  • Clear definitions of “nominee” and “disguised transaction” to cover indirect ownership and concealed financial or property dealings.
  • Explicit inclusion of both direct and indirect shareholding in regulatory scrutiny, with enhanced qualifications for the 51% Thai shareholders.
  • Classification of legal entities controlled through preference shares as foreign juristic persons.
  • Updated requirements for registered capital, including mandatory submission of evidence demonstrating actual payment (e.g., bank statements) to prevent false declarations.
  • Designation of FBA violations as predicate offenses under the Anti-Money Laundering Act, enabling asset seizure during investigations.
  • Granting the DBD investigative and arrest powers in nominee-related offenses.
peaceful coast washed by calm water of endless ocean

2. Department of Lands

  1. Enforcement Guidelines
  • Issuance of clear enforcement guidelines and their widespread circulation to prevent land ownership by foreign nationals through nominee arrangements.
  1. Amendments to the Land Code to:
  • Increase penalties for foreigners violating land ownership laws.
  • Forfeit unlawfully held land to the state without compensation to the foreign holder.

3. Lawyers Council of Thailand

  1. Code of Ethics
  • Introduction and enforcement of a binding code of ethics that prohibits legal professionals from advising on or facilitating nominee structures.
  1. Professional Conduct Rules
  • Establishment of professional conduct rules to ensure lawyers do not support arrangements that bypass foreign ownership restrictions.

Implementation Framework

The Ministry of Commerce has been designated as the principal agency to deliberate on this matter in collaboration with relevant agencies and to submit the outcome of such deliberations to the Cabinet Secretariat within 30 days for further consideration by the Cabinet.

The Cabinet has acknowledged the Ombudsman’s findings and recommendations, directing the Ministry of Commerce to conduct a comprehensive review of the issue. The Ministry of Commerce will collaborate with 13 other agencies, including Ministry of Finance, Ministry of Agriculture and Cooperatives, Ministry of Natural Resources and Environment, Ministry of Interior, Ministry of Justice, Ministry of Labor, Ministry of Industry, Board of Investment, Royal Thai Police, Anti-Money Laundering Office, Internal Security Operations Command and Bank of Thailand.

This joint effort aims to reach a definitive resolution within 30 days, with the Ministry of Commerce responsible for submitting a summary of its findings, actions taken, and overall recommendations to the Cabinet Secretariat for further consideration.

Conclusion

The Cabinet’s recognition of the Ombudsman’s findings represents a crucial step in addressing a long-standing loophole in Thailand’s property ownership regulations. While foreign investment remains vital to Thailand’s economy, the misuse of nominee structures has distorted the property market and undermined legal integrity. The lack of unified enforcement and ambiguous legal definitions have limited the government’s ability to effectively regulate foreign participation in land ownership.

With a whole-of-government approach now underway, Thai authorities aim to restore fairness, uphold legal safeguards, and ensure that land and property ownership align with national interests. The forthcoming recommendations from the Ministry of Commerce and its partner agencies will be decisive in shaping future land policies and enforcement mechanisms.

Author: Panisa Suwanmatajarn, Managing Partner.

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The Ripple Effect EP. 7: Thailand Set to Begin Official Tariff Negotiations with the U.S.

Following the formal agreement to commence tariff negotiations with the United States, the Thai government is preparing to submit its official trade proposal to the U.S., with the first round of discussions scheduled to take place at a conference meeting.

Background and Current Status

Thailand recently participated in an online negotiation session with the United States Trade Representative (USTR), during which the U.S. outlined five key priority areas for Thailand’s consideration. These priorities are designed to foster a more balanced and mutually beneficial trade relationship between the two countries.

U.S. Priority Areas

The USTR has identified the following five strategic areas for negotiation:

  1. Tariff measures and import quotas – Addressing existing trade barriers and quota restrictions
  2. Non-tariff trade barriers (NTBs) – Eliminating regulatory and administrative obstacles to trade
  3. Digital trade management – Establishing frameworks for digital commerce and data flows
  4. Enforcement of rules of origin – Strengthening compliance mechanisms for trade agreement provisions
  5. Economic and national security measures – Addressing security-related trade concerns

Timeline and Deliverables

The meeting served to clarify U.S. proposals and establish clear expectations. The USTR has requested that the Thai government submit its initial proposals, addressing the five main areas outlined above, by June 20, 2025, and the Thai government has already submitted so. The negotiations operate under a 90-day framework, with discussions expected to conclude by July 8, 2025. Should additional time be required, the U.S. is anticipated to extend the negotiation period.

Thailand’s Negotiation Strategy

Thailand remains confident that its proposals will yield positive outcomes. The preliminary offers previously presented by Thailand include:

  • Tariff reductions on specific imported goods
  • Procurement commitments for Boeing aircraft and U.S. military equipment
  • Reduction of non-tariff barriers

These proposals are considered substantial enough to encourage serious U.S. consideration and facilitate detailed negotiations. Thailand’s objective is to achieve a final tariff rate not exceeding 10%.

Confidentiality Constraints

Due to the signing of a Non-Disclosure Agreement (NDA), the Thai government is unable to disclose specific details of the ongoing negotiations.

Strategic Implications

The proposed tariff negotiations reflect the broader trade policy objectives of the U.S. government, which seeks to address trade imbalances and promote fairness in global commerce. These negotiations represent a critical juncture for Thailand in maintaining access to one of its most valuable export markets.

The outcome will have direct implications for Thai exporters and the overall bilateral economic relationship. This relationship remains subject to considerable uncertainty, particularly within the context of a challenging global economic environment.

boat in body of water

Recommendations

Stakeholders on both sides are advised to:

  • Closely monitor negotiation developments
  • Prepare comprehensive contingency plans for all possible outcomes
  • Maintain flexibility in strategic planning given the evolving nature of trade discussions

Conclusion

These negotiations constitute a pivotal moment in Thailand-U.S. trade relations. The successful resolution of these discussions will be instrumental in shaping the future economic partnership between the two nations and determining Thailand’s continued access to the U.S. market. Given the complexity of the issues at stake and the broader geopolitical context, careful attention to both the negotiation process and its outcomes will be essential for all stakeholders involved.

Author: Panisa Suwanmatajarn, Managing Partner.

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How the Act for the Establishment of and Procedure for the Tax Court (No. 3) B.E. 2568 (2025) Transforms Tax Dispute Litigation

Background

The litigation of tax disputes in Thailand has historically been governed by the Act for the Establishment of and Procedure for the Tax Court B.E. 2528 (1985) and the Regulation on Tax Cases B.E. 2544 (2001). Since having been enforced until the enforcement of their amendments, the Tax Court’s jurisdiction has been confined exclusively to civil matters. In cases involving both tax-related civil and criminal issues, plaintiffs have been required to bifurcate their proceedings, filing criminal complaints with criminal courts having jurisdiction over the cases while pursuing civil remedies through the Tax Court.

Legislative Reform

This procedural framework is set to undergo significant transformation under the Act for the Establishment of and Procedure for the Tax Court (No.3) B.E. 2568 (2025), which substantially expands the Tax Court’s jurisdiction to encompass criminal tax offenses. This expansion reflects the legislature’s recognition that adjudicating tax-related criminal matters requires specialized expertise in tax law and revenue collection systems.

Key Amendments

1. Expansion of Criminal Jurisdiction

The Tax Court is now vested with the authority to adjudicate criminal cases arising under the following statutes:

  • The Revenue Code
  • The Customs Act
  • The Excise Tax Act
  • Additional offenses as may be designated by the Royal Decree

Exception: Cases falling under the jurisdiction of the Juvenile and Family Court remain excluded from this expanded mandate.

close up photo of wooden gavel

Jurisdictional Guidelines:

  • Single Act, Multiple Violations: Where a single act violates multiple provisions of tax legislation, the Tax Court shall exercise comprehensive jurisdiction over the entire matter.
  • Multiple Acts: In cases involving multiple acts where some fall outside the Tax Court’s jurisdiction, the Tax Court possesses discretionary authority to either:
    • Consolidate and adjudicate all acts collectively; or
    • Exercise jurisdiction solely over matters within its competence while requiring plaintiffs to pursue separate proceedings in those jurisdictional courts for remaining offenses.

2. Procedural Law Modernization

The amendment introduces significant procedural reforms. Previously, tax cases were governed exclusively by the Civil Procedure Code applied mutatis mutandis. Under the revised framework, the Tax Court may now apply:

  • The Criminal Procedure Code (mutatis mutandis); and
  • Procedural rules governing district courts (mutatis mutandis)

This dual procedural framework provides the Tax Court with enhanced flexibility to address the hybrid nature of tax disputes effectively.

3. Court Hearing Notification Protocols

The Act establishes differentiated notification requirements:

General Civil Cases: Parties failing to appear at scheduled hearings bear responsibility for obtaining subsequent hearing dates from the Tax Court. Failure to do so results in constructive notice of future proceedings.

Criminal Cases: The aforementioned rule does not apply, ensuring enhanced due process protections in criminal tax matters.

Implementation Timeline

The Act for the Establishment of and Procedure for the Tax Court (No. 3) B.E. 2568 (2025), will enter into force 180 days after the date of publication in the Royal Gazette (25 May 2025). Importantly, the legislation does not apply retroactively to criminal tax cases already pending in other jurisdictional courts prior to the effective date.

Stakeholder Concerns and Future Considerations

During the legislative drafting process, certain stakeholders raised substantive concerns regarding the fundamental nature of tax dispute resolution. They argued that tax cases are inherently administrative disputes and that the current accusatorial system, adopted due to the Tax Court’s establishment preceding that of the administrative court, creates systemic disadvantages for private litigants contesting state authorities. These stakeholders advocated for adopting an inquisitorial system similar to that employed by the administrative court, arguing that the current framework places an undue evidentiary burden on individuals lacking the resources and access necessary to effectively challenge governmental determinations. While these proposals were not incorporated into the current amendment, given the legislation’s focused objective of ensuring specialized judicial expertise in criminal tax matters, such considerations remain significant and may inform future legislative reforms.

Conclusion

The Act for the Establishment of and Procedure for the Tax Court (No. 3) B.E. 2568 (2025) represents a meaningful evolution in Thailand’s tax dispute resolution framework. By consolidating both civil and criminal tax jurisdiction within a specialized court system, the legislation aims to enhance judicial efficiency and ensure that complex tax matters receive appropriate expert consideration. This reform establishes a foundation for more comprehensive future developments in Thai tax litigation.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand’s Strategic Tax Reform: Encouraging SEZ Investment Through Reduced Corporate Tax Rates

On January 13, 2025, the Thai Cabinet approved in principle a draft Royal Decree issued under the Revenue Code, establishing a comprehensive tax incentive framework to promote investment in Special Economic Zones (SEZs). This initiative reduces the Corporate Income Tax (CIT) rate to 10% for qualifying entities engaged in targeted activities within designated SEZ areas. The Royal Decree officially took effect on June 6, 2025, as the “Royal Decree Issued under the Revenue Code on the Reduction of Tax Rates (No. 797), B.E. 2568 (2025).“

Thailand’s commitment to SEZ development is demonstrated through comprehensive support including infrastructure development, investment incentives, streamlined labor management, and integrated one-stop services. Currently, 10 SEZs operate in strategic border locations: Tak, Mukdahan, Sa Kaeo, Songkhla, Trat, Nong Khai, Narathiwat, Chiang Rai, Nakhon Phanom, and Kanchanaburi.

Key Provisions of the Royal Decree

1. Corporate Income Tax Reduction

The Royal Decree establishes a preferential CIT rate of 10% of net profit for companies and juristic partnerships engaged in Board of Investment (BOI)-designated targeted activities. Eligible enterprises must operate within SEZ boundaries, regardless of their headquarters location, and derive income from manufacturing goods or providing services utilized within the SEZs.

This substantial tax incentive applies for 10 consecutive accounting periods, providing long-term investment certainty for businesses planning significant capital commitments in these strategic areas. The accounting period framework is defined as follows:

  • Standard Timeline: If an accounting period commences on or after the date of business registration with the Revenue Department (RD) for SEZ tax benefits, that period constitutes the first accounting period in the sequence.
  • Mid-Period Registration: If a business registers for SEZ tax benefits during an ongoing accounting period, that period remains counted as the first, even if its duration is less than twelve months.

2. Establishment Requirements for New Registered Juristic Persons

The Royal Decree establishes distinct requirements based on entity establishment dates:

  • Post-Effective Date Entities: Companies or juristic partnerships established after June 6, 2025, must maintain business premises within SEZs that consist of permanent structures.
  • Pre-Existing Entities: For entities registered before June 6, 2025, any premises established within SEZs must comprise permanent buildings and represent either an expansion of or addition to existing facilities.

3. Comprehensive Eligibility Criteria

To qualify for the reduced 10% CIT rate, companies and juristic partnerships must satisfy multiple specific requirements:

  • Registration Compliance: Entities must register with the RD to claim SEZ tax benefits in accordance with prescribed rules and procedures.
  • Investment Promotion Act Compatibility: Entities must not simultaneously claim CIT exemption, whether in whole or in part, under the Investment Promotion Act.
  • Revenue Code Exclusivity: Entities must not claim any alternative CIT reduction provisions under the Revenue Code.
  • Accounting Segregation: Entities must maintain separate accounting records distinguishing between activities eligible and ineligible for SEZ tax benefits.
  • Regulatory Adherence: Entities must comply with all criteria, methods, and conditions as announced by the RD.

4. Termination Provisions for Tax Incentive Eligibility

The Royal Decree establishes strict enforcement mechanisms for maintaining eligibility. Should any company or juristic partnership fail to meet eligibility requirements during any accounting period, entitlement to the reduced CIT rate terminates immediately, effective from that specific accounting period.

Strategic Economic Impact

This tax incentive framework is projected to significantly enhance investment flows into SEZs, catalyzing increased industrial activity and employment generation in border regions. The initiative strengthens Thailand’s competitive positioning and reinforces its strategic potential as a regional economic hub within the ASEAN framework.

Conclusion

The implementation of the 10% CIT rate under this Royal Decree represents Thailand’s strategic commitment to attracting substantial investment into SEZs. Through the provision of long-term tax incentives, establishment of clear operational requirements, and enforcement of rigorous eligibility criteria, the government seeks to enhance SEZ competitiveness while promoting sustainable economic development in border areas.

Businesses seeking to capitalize on these incentives must ensure full compliance with all stipulated conditions to maintain their eligibility status. This framework underscores the critical importance of regulatory adherence as a prerequisite for accessing preferential fiscal treatment, establishing a clear value proposition for compliant investors while maintaining the integrity of Thailand’s tax incentive system.

Author: Panisa Suwanmatajarn, Managing Partner.

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Liquor Production: Empowering Farmers and Small-Scale Entrepreneurs

In June 2025, the Royal Gazette of Thailand published the Excise Tax Act (No. 2) B.E. 2568 (2025), marking a significant reform in the country’s liquor production regulations. Effective June 6, 2025, this legislation amends the Excise Tax Act B.E. 2560 (2017) to facilitate greater access to legal liquor production licenses for farmers, cooperatives, community enterprises, and small-scale entrepreneurs. The act aims to promote economic fairness, support local agriculture, and reduce barriers to entry in the liquor industry while ensuring consumer protection and regulatory compliance.

Background and Purpose:

The Excise Tax Act (No. 2) B.E. 2568 (2025) was enacted to address the restrictive nature of previous regulations, which limited opportunities for small-scale producers to legally enter the liquor market. By revising Section 153 of the Excise Tax Act B.E. 2560 (2017), the new law simplifies the licensing processes and encourages the use of domestic agricultural products in liquor production. This reform aligns with Thailand’s constitutional provisions under Sections 26 and 40, which allow for the restriction of rights and freedoms only to protect consumers and regulate professional activities in a fair and non-discriminatory manner.

The primary objectives of the revised Act are to:

  • Promote economic inclusivity by enabling small-scale producers, including farmers and community enterprises, to obtain liquor production licenses.
  • Support the use of local agricultural products in the production of diverse types of liquor, including flavored or colored varieties.
  • Eliminate unfair economic monopolies and discriminatory practices in the licensing process.
  • Ensure that regulations do not impose undue burdens on applicants, except where necessary to limit foreign ownership or support state enterprises and small-scale industries.

Key Provisions of the Revised Act:

1. Simplified Licensing Processes (Section 3)

The amended Section 153 of the Excise Tax Act B.E. 2560 (2017) allows individuals or entities wishing to produce liquor or possess distillation equipment to apply for a license from the Director-General of the Excise Department. The application and issuance processes are governed by criteria, methods, and conditions outlined in ministerial regulations. These regulations must prioritize:

  • Supporting cooperatives, farmer groups, community enterprises, and small-scale entrepreneurs in obtaining licenses for commercial liquor production.
  • Promoting the use of domestic agricultural products in liquor production.
  • Ensuring fairness by prohibiting criteria that create economic monopolies, discriminatory practices, or unnecessary burdens, except in cases involving foreign ownership restrictions or state enterprises.

Licenses issued under this section are valid for three years from the date of approval.

woman signing documents

2. Transition and Implementation (Section 4)

Existing ministerial regulations, announcements, and rules issued under the Excise Tax Act B.E. 2560 (2017) remain in effect until new regulations are enacted, provided they do not conflict with the amendments. The Ministry of Finance is tasked with issuing updated regulations within 180 days from the revised Act’s effective date (i.e. June 6, 2025).

3. Pending Applications (Section 5)

Applications submitted before the revised Act’s effective date (i.e. June 6, 2025) will be processed under the amended law. If any application does not comply with the new requirements, the Director-General of the Excise Department will notify applicants to make necessary adjustments.

4. Validity of Existing Licenses (Section 6)

Licenses issued under the previous Section 153 remain valid until their expiration, ensuring a smooth transition for current license holders.

5. Oversight and Enforcement (Section 7)

The Minister of Finance is responsible for overseeing the implementation of the revised Act, ensuring compliance with its provisions and objectives.

Implications for Stakeholders:

Farmers and Agricultural Communities

The revised Act empowers farmers and agricultural cooperatives by allowing them to transform local produce into value-added liquor products. This creates new income streams and supports rural economies by leveraging Thailand’s rich agricultural resources.

Small-Scale Entrepreneurs

By removing discriminatory barriers and simplifying the licensing process, the act enables small-scale entrepreneurs to enter the liquor market legally. This fosters innovation, encourages the production of unique and artisanal liquors, and promotes competition in an industry previously dominated by larger players.

Consumers

The Revised Act’s emphasis on consumer protection ensures that all liquor produced under the new licensing framework meets safety and quality standards. Consumers may also benefit from a wider variety of locally produced liquors, potentially at more competitive prices.

Government and Regulatory Bodies

The Excise Department is tasked with developing clear and fair regulations within the 180-day timeframe. This includes establishing standards for liquor production and ensuring that the licensing process is accessible and transparent.

Challenges and Considerations:

While the act is a significant step toward economic inclusivity, its success depends on the timely issuance of clear ministerial regulations. The 180-day deadline for updating rules is critical to avoid delays in implementation. Additionally, the Excise Department must balance consumer safety with the need to minimize bureaucratic hurdles for small-scale producers. Monitoring foreign ownership and ensuring compliance with production standards will also be key to maintaining fairness and protecting local interests.

person holding clear glass

Conclusion:

The Excise Tax Act (No. 2) B.E. 2568 (2025) represents a transformative shift in Thailand’s liquor industry, unlocking opportunities for farmers, cooperatives, and small-scale entrepreneurs. By promoting the use of domestic agricultural products and eliminating unfair barriers, the act fosters economic growth, innovation, and inclusivity. As Thailand moves toward a more equitable and vibrant liquor market, the effective implementation of this legislation will be crucial to realizing its full potential.

Key Takeaways:

  • Transition Period: Existing licenses remain valid, and pending applications will be processed under the revised Act and its regulations, with adjustments as needed.
  • Effective Date: The Excise Tax Act (No. 2) B.E. 2568 (2025) takes effect on June 6, 2025, with new regulations to be issued within 180 days.
  • Simplified Licensing: The amended Section 153 facilitates access to liquor production licenses for farmers, cooperatives, and small-scale entrepreneurs.
  • Support for Local Agriculture: The revised Act encourages the use of domestic agricultural products in liquor production and boosting rural economies.
  • Fairness and Transparency: Licensing criteria must avoid discriminatory practices, monopolies, or excessive burdens, except for foreign ownership restrictions.
  • Consumer Protection: The revised Act ensures that all licensed liquor production meets safety and quality standards.

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.

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The Ripple Effect EP.5: Thailand’s Strategic Trade Proposal to Strengthen U.S. Bilateral Relations

As Thailand takes decisive steps to combat origin fraud, protect the integrity of its exports, and rebuild trust with the United States, the Thai government has formally submitted a comprehensive trade proposal to representatives of the United States Trade Representative. Announced by Thailand’s Finance Minister, the proposal aims to strengthen bilateral trade and reduce Thailand’s trade surplus with the U.S. by 50% within five years through a strategic five-point plan.

In a clear signal of strengthening bilateral ties, the U.S. Secretary of the Treasury expressed support for Thailand’s new trade proposal during the recent Saudi Investment Forum. This development reflects broader U.S. willingness to deepen economic cooperation with key Asia-Pacific partners, with Thailand increasingly viewed as a reliable and strategic counterpart in Southeast Asia.

Thailand’s proposal was reportedly well-received and regarded as comparable to recent submissions from other regional economies, including Indonesia and Taiwan. The favorable assessment of Thailand’s initiative underscores the country’s growing importance in regional trade architecture and highlights its proactive approach to navigating shifting global trade dynamics.

Thailand’s approach, focused on joint production models, local investment benefits, and enhanced cooperation at the state level, aligns with current U.S. interests in resilient and diversified supply chains. The overall momentum suggests that Thailand is well-positioned to advance its role as a regional hub and trusted partner in future trade frameworks.

grayscale photo of high rise glass buildings

This development occurs at a time when global economic and geopolitical uncertainties require renewed focus on sustainable and mutually beneficial trade partnerships. Thailand’s engagement strategy appears to be gaining traction, reinforcing its long-term position in the global trade system.

The Thai Finance Minister also expressed confidence that the U.S. would lower its import tariffs on Thai products from 36% to 10%, citing the positive reception of Thailand’s five key trade proposals.

The five main elements of Thailand’s proposal remain consistent with those outlined in our previous report. Thailand continues to actively promote private sector investment in the U.S., focusing on high-potential companies in key industries such as petrochemicals, energy, and automotive components. In recent discussions with representatives of the U.S. Department of Commerce, Thai officials also presented joint manufacturing proposals, including producing solar panels or automotive parts in Thailand for final assembly in the U.S., as a means of adding value and generating employment in both countries.

Conclusion

Thailand’s comprehensive trade proposal represents a proactive approach to reshaping its economic relationship with the U.S. By focusing on mutual growth across the energy, agriculture, technology, and investment sectors, the plan offers a balanced strategy for reducing trade imbalances while strengthening strategic ties. The U.S. Treasury Secretary’s public endorsement lends credibility to Thailand’s initiatives and confirms its growing status as a regional economic leader.

Despite this positive momentum, no formal negotiation date has been scheduled. Thai officials anticipate a response and potential meeting arrangements within the next two weeks. This initiative signals a promising trajectory for long-term cooperation between the U.S. and Thailand amid global uncertainty.

Author: Panisa Suwanmatajarn, Managing Partner.

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Liquor Industry: Empowering Small-Scale Producers

Introduction:

Alcohol production in Thailand is a vital part of the economy, deeply rooted in local culture, traditional knowledge, and agriculture. The Liquor Act B.E. 2493 (1950) has long governed the sector with stringent licensing requirements, such as minimum machinery size, employee numbers, and capital investment. These rules have favored large corporations, creating significant barriers for small-scale producers and stifling competition and innovation.

To address these challenges, the Thai government introduced the Ministerial Regulation on the Production of Liquor B.E. 2565 (2022), which aimed to simplify licensing and support small and medium enterprises (SMEs) and community-based producers. Building on this, the Draft Ministerial Regulation on the Production of Liquor (No. ..), B.E. …. (the “Draft Ministerial Regulation“), approved by the Thai Cabinet on May 13, 2025, further advances these reforms by promoting inclusivity and sustainability in the liquor industry.

Recent Developments in the Draft Ministerial Regulation:

The Draft Ministerial Regulation, proposed by the Ministry of Finance, underwent public consultation from December 25, 2024, to January 9, 2025, via the Excise Department’s website and Thailand’s central legal portal. It seeks to balance high production standards with increased support for local enterprises, including agricultural cooperatives and small-scale producers. The regulation aims to foster fair competition, integrate local wisdom, and promote Thailand’s soft power through cultural and creative industries while aligning with the ease of doing business policy.

Key Amendments in the Draft Ministerial Regulation:

  1. Relaxed Location Restrictions for Distilleries
    Previously, small and medium scale distilleries were required to be located at least 100 meters from public water sources. The Draft Ministerial Regulation allows distilleries to operate closer if they install wastewater treatment systems meeting Excise Department environmental standards, reducing barriers for small producers.
  2. Elimination of the One-Year Progression Requirement
    Medium-scale producers no longer need to operate as small-scale facilities for one year before applying for a production license. This streamlines the licensing process, making it easier for new entrants to join the market.
  3. Support for Craft Beer and Fresh Beer Markets
    Breweries producing fresh beer can now distribute their products off-site in designated containers like kegs, creating new opportunities for Thailand’s growing craft beer industry.
  4. Updated Terminology for Clarity
    The term “industrial fermented liquor facility for on-site beer sales” has been replaced with “fresh beer industrial facility” to better align with modern craft beer business practices, improving regulatory clarity.
shot glasses placed on tabletop

Alignment with Broader Reforms:

The Ministerial Regulation on the Production of Liquor B.E. 2565 (2022) laid the groundwork for liberalizing the liquor industry, but small producers still faced challenges. The Draft Ministerial Regulation builds on this by further easing restrictions and complements proposed legislative reforms, such as the Draft Progressive Liquor Law, the Draft United Thai Liquor Law, and the Draft Community Liquor Law. Together, these initiatives aim to create a more open, competitive, and diverse liquor industry.

Conclusion:

The Draft Ministerial Regulation marks a pivotal step toward revitalizing Thailand’s liquor industry by empowering small-scale and community-based producers. By reducing regulatory hurdles and promoting local entrepreneurship, it fosters innovation and cultural preservation while enhancing economic opportunities. Stakeholders, including small producers and entrepreneurs, should monitor the Draft Ministerial Regulation’s finalization and implementation to ensure compliance and seize emerging opportunities.

Author: Panisa Suwanmatajarn, Managing Partner.

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