Thailand enacts global minimum tax: Key implications of the Emergency Decree on Top-Up Tax B.E. 2567

The Decree establishes a 15% global minimum tax on in-scope multinational enterprise (MNE) groups and will be effective for fiscal years beginning on or after 1 January 2025. This move reaffirms Thailand’s strategic alignment with international tax standards and its broader commitment to combating base erosion and profit shifting in line with global policy developments.  

Although the Decree broadly reflects the OECD’s GloBE Model Rules, several critical areas remain subject to further regulatory interpretation. Additional guidance is anticipated through ministerial regulations and administrative notifications to be issued by the Thai Revenue Department (TRD), which will be essential for ensuring consistent application and operational clarity.  

Who is subject to the Top-Up Tax?  

The Decree applies to MNE groups with consolidated revenues of at least EUR 750 million (approximately THB 28 billion), measured in at least two of the four preceding accounting periods. Thai entities may be affected if they are: 

• The Ultimate Parent Entity (UPE) or an intermediate parent within a qualifying group; 
• A constituent entity located in Thailand, including subsidiaries, branches, or joint ventures; 
• Beneficiaries of tax incentives, such as those promoted by the Board of Investment (BOI) or under the International Business Center (IBC) regime. Importantly, Thai entities benefiting from preferential tax treatments (e.g., corporate income tax exemptions or reductions) may trigger Top-Up Tax liabilities if their jurisdictional effective tax rate (ETR) falls below the 15% threshold. 

Key features of the decree 

The Emergency Decree implements three core elements of the Pillar Two framework: 

• Income Inclusion Rule (IIR): Requires parent entities to pay top-up tax on low-taxed income of foreign subsidiaries. 
• Undertaxed Payments Rule (UTPR): Applies as a backstop to the IIR, allowing other jurisdictions to collect the top-up tax where the IIR is not applied. 
• Qualified Domestic Minimum Top-Up Tax (QDMTT): Ensures low-taxed income earned in Thailand is taxed domestically before foreign jurisdictions apply IIR or UTPR. 

The Top-Up Tax is calculated at the jurisdictional level and takes into account: 

• Adjusted covered taxes; 
• Net GloBE Income, based on accounting standards and adjusted for specific items; 
• Substance-based Income Exclusion (SBIE), based on qualifying payroll and tangible assets. 

The effective tax rate (ETR) calculation and allocation of top-up tax must follow detailed formulas outlined in the Decree. Specific methodologies for calculating the effective tax rate and potential safe harbor provisions are expected to be detailed in forthcoming ministerial regulations. 

Reporting and filing obligations 

Thai constituent entities are required to comply with new filing and reporting obligations, including: 

• Submission of GloBE Information Return (GIR) and other disclosures within 15 months after the end of the relevant fiscal year (extended to 18 months for the first filing period); 
• Top-Up Tax return to the TRD, including the amount of domestic top-up tax payable; 
• Identification of the UPE and the responsible filing entity. 

Thai entities may be exempt from filing the GIR locally if it is submitted by the UPE (or surrogate) in a jurisdiction that has a Qualifying Competent Authority Agreement (QCAA) with Thailand. 

The Decree also allows: 

• Instalment payment of tax liabilities over three months; 
• Refund of overpaid Top-Up Tax within three years; 
• Imposition of surcharges at 1.5% per month, penalties of up to 200% of the unpaid amount, and criminal sanctions in cases of intentional misreporting or fraud. 

Practical considerations and next steps 

Given the scope and complexity of the rules, MNEs operating in Thailand are encouraged to take the following preparatory steps: 

1. Assess scope and impact: Determine whether the group exceeds the EUR 750 million threshold and identify affected Thai entities. 
2. Review incentive structures: Re-evaluate existing tax privileges. The BOI has informally introduced a 10% CIT election for BOI projects as an alternative to full exemptions. Further clarification is expected to be provided by the Investment Promotion laws. 
3. Prepare data and systems: Ensure financial systems can support jurisdictional-level reporting and ETR calculations based on GloBE metrics. 
4. Coordinate within the group: Confirm responsibilities for GIR filing and inter-company data gathering, particularly where the UPE is located outside Thailand. 
5. Monitor for regulatory updates: Stay alert for supplementary ministerial regulations and administrative guidance from the TRD, including the application of safe harbour rules, treatment of certain tax credits, and further compliance mechanics. 

Our observations 

The Emergency Decree on Top-Up Tax represents a landmark development in Thailand’s international tax framework and is expected to have significant implications for multinational enterprises with operations in the country. While the current structure aligns broadly with OECD guidelines and provides a solid foundation, the full impact will depend on forthcoming regulatory guidance and implementation measures.  

In light of this, early-stage preparedness, proactive compliance planning, and close coordination with group-level tax functions will be essential to mitigate risk, ensure consistency, and align with evolving requirements under the new regime.