Thailand Cabinet Approves Draft Bill to Support Companies Affected by Top-Up Tax 

New bill offers tax credits and refunds to help global companies manage Top-Up Tax while encouraging investment in innovation and sustainability. 

The Thai cabinet has approved in principle the draft National Competitiveness Enhancement for Targeted Industries Bill, a measure designed to offset the financial impact of the recently introduced Top-Up Tax on multinational enterprises. The proposed legislation represents a step in reconciling Thailand’s obligations under international tax standards with its goal of maintaining an attractive investment environment.

Top-Up Tax in Thailand 

The Top-Up Tax was enacted by emergency decree in 2024 and was to take effect from the beginning of 2025. It is part of the OECD and G20 global minimum tax initiative, specifically the second pillar of the Inclusive Framework on Base Erosion and Profit Shifting. Under these rules, multinational groups with consolidated revenues of at least seven hundred and fifty million euros, or approximately thirty billion baht, in at least two of the past four fiscal years will be required to pay a minimum effective corporate income tax rate of fifteen percent in Thailand. The Top-Up Tax is applied in cases where a company’s effective rate falls below this threshold, ensuring that profits cannot be shifted to low-tax jurisdictions and that Thailand remains aligned with the global effort to create fairer international tax practices. 

Key Provisions of the new Bill

The draft National Competitiveness Enhancement Bill is intended to reduce the additional burden that this new regime may place on multinational companies operating in Thailand, particularly those that invest heavily in strategic industries. Its central purpose is to encourage expenditure in areas considered vital to Thailand’s long-term economic development, such as research and development, advanced skills training, improvements in production efficiency, and sustainable investment. The government has sought to ensure that while companies comply with their new obligations under the Top-Up Tax, they are also given meaningful opportunities to recover part of these costs through credits and refunds that reward activities supporting innovation and competitiveness. 

The provisions of the draft law create a system of tax credits proportionate to a company’s eligible expenditures in the targeted areas. These credits may be applied to offset tax liabilities, and in cases where companies cannot fully utilize them in a given year, they may apply for refunds. The process for securing refunds will be administered through the Board of Investment, which will be responsible for receiving applications and coordinating with the Ministry of Finance and the tax authorities. A new commission will oversee the scheme, with powers not only to approve refunds and disbursements from the Competitiveness Enhancement Fund but also to revoke benefits if they are found to have been improperly granted or misused. The government is required to allocate sufficient resources to this fund to ensure that refunds can be paid out efficiently. If rights are revoked, the revocation can be applied retroactively to the relevant tax years, and any improperly claimed benefits may be recovered under the normal provisions of Thai tax law. 

For businesses, the implications of the new tax and the accompanying relief measures are substantial. From the 2025 tax year onward, multinational groups meeting the revenue thresholds will not be able to avoid paying at least a fifteen percent rate of corporate tax in Thailand. At the same time, those that align their expenditures with Thailand’s development priorities will be able to benefit from tax relief mechanisms that ease the impact of the global minimum tax. This approach reflects an attempt to balance two competing objectives. On the one hand, Thailand is obliged to comply with international standards under the OECD framework. On the other, it must continue to offer conditions that make it competitive in attracting foreign direct investment. 

In practice, companies operating in Thailand will need to carefully assess their structures, document their expenditures in the eligible categories, and prepare to demonstrate compliance if they wish to benefit from the credits or refunds provided by the new scheme. Misuse or improper claims could expose them not only to repayment obligations but also to reputational risk. The emphasis on coordination between the Board of Investment and the Ministry of Finance underlines the seriousness with which the government intends to monitor the system. 

The approval of the draft National Competitiveness Enhancement Bill by the cabinet is only an initial step in the legislative process, but it highlights the government’s determination to integrate the global minimum tax into domestic law while mitigating its potential drawbacks. For multinational enterprises, this development should serve as a clear signal to begin planning for compliance with the new regime while also considering how best to structure their activities in Thailand to take advantage of the proposed relief measures. The coming months will be crucial as the legislative process moves forward and more detailed guidance is issued on implementation.

If you have any questions regarding the Top-Up tax in Thailand. Please feel free to contact us at [email protected]