Tax and Legal Update

The Thailand Cabinet has given in-principle approval of measures to support the implementation of a Global Minimum Tax Plan in line with the OECD BEPS 2.0 Pillar Two Rules

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:



Draft relevant legislation and set the appropriate outline, which      tentatively will be considered in 2023 and become effective in 2025,  for the following matters:

     Collect the top-up payment according to Pillar Two (currently in the process of drafting by the TRD)

­     Allocate at least 50% but not more than 70% of the revenues from the collected top-up payment at least 50%, to the National Competitiveness Enhancement Fund (discussions regarding the percentage to be allocated are proceeding between TRD and BOI)

­     Submit top-op taxpayer’s information to BOI.


  Ø  BOI

­     Amend the National Competitiveness Enhancement Fund Act to empower funding and Thailand's competitiveness.

­     Promote BOI investment promotion to qualified investors to improve Thailand's competitiveness and long-term investment.

­     Provide measures to relieve the impact of this tax collection.



The Pillar 2 rules are complex. They aim to address the digital economy's tax challenges but have a far broader reach. Whilst there are adjustments to consider the number of assets or employees in each jurisdiction, there is no automatic exclusion for having substance in a jurisdiction. Specific exclusions are available for certain industries, but they are very limited.

Calculating the top-up tax in each jurisdiction requires careful adherence to the rules prescribed by the OECD and covering both tax and accounting concepts. Even determining how to adjust taxes for a top-up amount requires adherence to specific Global anti Erosion Rules.

Thai MNCs with a consolidated global turnover of over euros 750 million Euros (B27.7 billion) are most likely subject to the new rules. They should start considering the impact on their global tax expense as soon as possible. Changes to structures and negotiating new incentives may yield significant benefits.  

Foreign MNCs with holding companies in Pillar 2 compliant jurisdictions and with low-taxed investments in Thailand should also be considering their corporate, business and finance structures. They may also consider engaging with the BOI to determine whether their current incentives are still tax efficient or could be amended to consider the Pillar 2 rules.

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