Thailand's New Tax Initiative

In a significant move to align with global tax standards, Thailand's finance ministry announced on Friday the implementation of a "top-up tax" at the globally agreed minimum rate of 15%. This decision is part of the Global Minimum Tax framework, aimed at setting a baseline for tax competition worldwide.

Understanding the Global Minimum Tax

The Organisation for Economic Cooperation and Development (OECD) is leading the charge with new rules that mandate a minimum 15% tax on multinational corporations generating an annual global turnover exceeding 750 million euros (US$781 million), irrespective of their operational locations.

Current Tax Landscape in Thailand

Currently, Thailand's corporate tax rate stands at 20%. However, companies benefiting from incentives provided by the Thailand Board of Investment can enjoy tax exemptions for up to 13 years, highlighting the country's efforts to attract foreign investment while transitioning to the new tax regime.

Regional Adoption of the Minimum Tax

Following Vietnam's parliamentary approval of the minimum global tax rate last year, other Southeast Asian nations including Indonesia, Malaysia, and Singapore have also committed to implementing the 15% minimum tax rate by 2025, signaling a regional shift towards more uniform tax policies.