Thailand’s adoption of the global minimum tax in December 2024 marks a significant shift for multinational companies operating in the country. Designed to ensure large corporations pay a fair share of taxes, this 15% minimum tax rate aligns with global standards set by the OECD. For multinationals, understanding this new regime is crucial to avoid double taxation and maintain compliance. At TCG Thailand, we help multinational businesses navigate these changes with strategic tax planning and compliance support. This guide provides key insights into Thailand’s global minimum tax and its implications for your operations.
Why Thailand Introduced the Global Minimum Tax
The global minimum tax, part of the OECD’s Pillar Two framework, aims to prevent tax base erosion by ensuring multinational enterprises (MNEs) with annual revenues over EUR 750 million (approximately THB 28 billion) pay a minimum effective tax rate of 15% in every jurisdiction they operate. Thailand implemented this through the Emergency Decree on Top-Up Tax, effective December 2024, to remain competitive and attract foreign investment while addressing tax avoidance. This move aligns Thailand with over 140 countries adopting the framework, ensuring MNEs contribute fairly to the local economy, which supports public services like education and infrastructure.
Who Is Affected by the Global Minimum Tax in Thailand
The tax applies to MNEs with global revenues exceeding EUR 750 million, including their subsidiaries and branches in Thailand. For example, a U.S.-based tech giant like Google or a Japanese manufacturing firm with operations in Thailand may be subject to the tax if their global revenue meets the threshold. Smaller subsidiaries with revenues below THB 360 million (approximately EUR 10 million) may qualify for a five-year transitional safe harbor, delaying compliance until 2030. However, MNEs in sectors like technology, manufacturing, and retail—key industries in Thailand—are most likely to be impacted, especially if their effective tax rate in Thailand falls below 15% due to incentives like BOI tax holidays.
How the Top-Up Tax Works in Thailand
Under Thailand’s global minimum tax regime, if an MNE’s effective tax rate in Thailand is below 15%, a top-up tax is applied to bring it up to the minimum rate. For instance, if a company benefits from a BOI tax exemption, reducing its effective rate to 5%, it must pay an additional 10% top-up tax on its Thai profits. The tax is calculated using the GloBE (Global Anti-Base Erosion) rules, which consider adjusted profits and taxes paid, excluding certain items like dividends and capital gains. MNEs must file a GloBE Information Return within 15 months of their fiscal year-end, starting from 2025, to report their global tax position. Non-compliance can result in penalties, including fines up to THB 200,000 and additional tax assessments.
Challenges and Opportunities for Multinationals
Implementing the global minimum tax poses challenges for MNEs in Thailand. Calculating the effective tax rate requires complex data collection across jurisdictions, often necessitating advanced tax software or expert support. MNEs benefiting from tax incentives, such as BOI exemptions or reduced rates in Special Economic Zones (e.g., Eastern Economic Corridor), may see their tax savings diminished, impacting profitability. However, the regime also offers opportunities—Thailand’s adoption signals a stable and transparent tax environment, making it an attractive destination for foreign direct investment (FDI). In 2024, FDI in Thailand reached THB 700 billion, a 10% increase from 2023, partly due to its alignment with global tax standards.
Strategic Tax Planning for Compliance in 2025
To manage the global minimum tax, MNEs should reassess their tax strategies in Thailand. This includes reviewing existing tax incentives to understand their impact on the effective tax rate and exploring alternative structures, such as profit repatriation or transfer pricing adjustments, to optimize tax outcomes. Investing in tax technology, like EY’s Global Tax Platform or PwC’s Tax Function of the Future tools, can streamline compliance by automating GloBE calculations. MNEs should also prepare for increased scrutiny from the Thai Revenue Department, which plans to audit 500 MNEs in 2025 to ensure compliance, up from 300 in 2024. Proactive planning can help avoid double taxation and maintain competitiveness in Thailand’s market.
How TCG Thailand Supports Multinational Companies
At TCG Thailand, we provide expert guidance to help multinational companies comply with the global minimum tax. Our team offers comprehensive tax planning, GloBE reporting, and compliance support, ensuring your business meets Thailand’s new requirements without disruption. With over 27 years of experience, we understand the complexities of cross-border taxation and can help you optimize your tax strategy while leveraging Thailand’s investment incentives. Partner with us to navigate this new tax landscape with confidence.
