Thailand Global Minimum Tax in 2025.
Thailand has implemented a 15% Global Minimum Tax (GMT) on multinational enterprises (MNEs) from January 2025, aligning with over 130 countries under the Organisation for Economic Co-operation and Development’s (OECD) BEPS 2.0 framework. This marks a significant policy shift to prevent tax avoidance and maintain economic competitiveness.
What is the Global Minimum Tax?
The GMT is a transformative approach to international taxation, targeting MNEs and introduced by the OECD. The aim is to promote fairness, reduce tax competition between countries and tackle profit shifting. Thailand is part of this initiative, structured under two main pillars.
Pillar 1: Enhancing fairness in global taxation
Pillar 1 ensures that MNEs are taxed in countries where they create substantial economic value, making sure profits are fairly allocated and taxed where they are earned.
Key points of Pillar 1:
- Applies to MNEs with global revenues exceeding EUR 200 billion per year
- Targets enterprises generating profits above 10% of annual revenue
- Includes a nexus rule for businesses earning at least EUR 1 million (around THB 38 million) annually in a specific country
Thailand will benefit from Pillar 1 as it will be able to tax MNEs that generate significant revenue from Thai consumers, which was previously not possible.
Pillar 2: Establishing a GMT
Pillar 2 sets a minimum effective tax rate (ETR) of 15% to combat harmful tax practices and prevent MNEs from shifting profits to low-tax jurisdictions.
Under Pillar 2, MNEs with annual consolidated revenues exceeding EUR 750 million must comply with the 15% ETR. Those in jurisdictions with an ETR below 15% must pay a top-up tax to meet the required threshold.
In Thailand, businesses likely to be affected include:
- Thai-listed companies on the Stock Exchange of Thailand that meet the revenue threshold.
- Financial institutions with annual consolidated revenues exceeding EUR 750 million.
Thai companies operating in jurisdictions that have adopted Pillar 2 are subject to mechanisms such as the Income Inclusion Rule (IIR) and the Under-Taxed Payment Rule (UTPR). To ensure compliance with the 15% effective tax rate, host countries may impose a Qualified Domestic Minimum Top-Up Tax (QDMTT). This could result in tax revenues from Thai companies abroad being collected by foreign tax authorities instead of the Thai Revenue Department.
Balancing tax reform and economic attractiveness
Thailand’s standard corporate tax rate is currently 20%, with various incentives offered by the Thailand Board of Investment (BOI) that allow tax exemptions of up to 13 years. These benefits have been central to attracting foreign direct investment (FDI), particularly in sectors like manufacturing, technology and high-value industries. However, the introduction of the GMT could undermine the effectiveness of these incentives. Businesses benefiting from BOI incentives may now face an effective tax rate (ETR) below 15% and must pay a top-up tax to comply with GMT.
Although neighbouring countries are also adopting the 15% GMT, Thailand’s reliance on tax holidays to attract investment makes the shift more challenging. Companies may increasingly consider factors such as infrastructure, labour quality and market access when making investment decisions. Despite these challenges, the Thai government views the reform as a move towards a fairer tax system while maintaining competitiveness. Policymakers have indicated that they will continue offering non-tax incentives and explore alternative strategies to attract investors, including the potential introduction of a QDMTT to retain additional tax revenue domestically.
How this affects multinational corporations
The GMT presents both challenges and opportunities for MNEs operating in Thailand. Some of the key considerations are:
- Compliance and tax planning
MNEs will need to reassess their tax strategies to comply with the new rules, and this may take some work. Structures optimised for tax efficiency under the old system may no longer deliver the same benefits, so companies will need to explore other options.
- Reevaluating investment incentives
Tax holidays and exemptions will lose some of their appeal under the GMT framework. Companies will need to assess the net impact of these changes on their operations and consider how other advantages offered by Thailand—such as proximity to supply chains and skilled labour—fit into their overall strategy.
- Regional tax landscape
Thailand’s move mirrors similar steps taken by neighbouring countries, levelling the playing field in Southeast Asia. Before making any decisions on expansion or where to allocate resources and investment, companies mlay want to monitor tax developments across the region.
Thailand’s commitment to global tax reform and investment competitiveness
Thailand’s adoption of the GMT signals its commitment to be part of international efforts to modernise tax systems. Beyond tax revenue, the reform is also in line with Thailand’s ambition to strengthen its global economic partnerships and boost its reputation as a responsible member of the global financial community.
This policy shift highlights a delicate balance. While aligning with international standards, Thailand must ensure that the new tax framework does not undermine its own attractiveness as an investment destination. To minimise these risks, the government could consider additional reforms or incentives that also emphasise Thailand’s broader economic strengths, such as its strategic location and robust infrastructure. For Thailand, the success of this change will depend on its ability to balance global compliance with economic competitiveness in a rapidly evolving regional landscape.
The implementation of the GMT in 2025 is a game-changer for Thailand. As it seeks to align with global tax standards, the government faces the dual challenge of maintaining its competitive edge in attracting foreign investment while also ensuring fair taxation. MNEs will have to prepare for these changes by reviewing their tax strategies and assessing the broader value proposition of operating in Thailand.
