Thailand is one of over 135 countries that have endorsed international tax measures to be introduced by the OECD/G20, referred to as Base Erosion and Profit Shifting (BEPS) 2.0. The original BEPS Project identified 15 Action Items, including harmful tax practices and tax treaty abuse, which the Thai Government has addressed, the latter through implementing the multilateral Instrument. The latest package of BEPS rules is the two pillars in BEPS 2.0. and it is aimed at addressing the tax challenges of the digitalization of economies.
· Pillar 1 – This applies to Multinational Enterprises (MNEs) with revenues exceeding Euros 20 billion (B739 billion). If the MNE has a ratio of profit before tax to turnover greater than 10% in a jurisdiction, Pillar 1 reallocates any excess, up to an additional 25%, to other jurisdictions where the MNE has sufficient nexus. Pillar 1 was not included in the Cabinet’s approved measures.
· Pillar 2 – The Global Minimum Tax Measure. It applies to MNEs with a turnover above 750 million Euros. Pillar 2 rules allocate a minimum tax rate of 15% for each jurisdiction where an MNE operates subject to certain de minimis criteria. A top-up tax is applied where the rate is below 15%. On 7 March 2023, the Thailand Cabinet approved in principle official plans for collecting Global Minimum Tax following the BEPS 2.0 Pillar Two rules.
The Thai Revenue Department (“TRD”) and the Board of Investment of Thailand (“BOI”) have been assigned by the Cabinet to be responsible for the scope as follows: