Thailand has introduced a renewed corporate income tax incentive for companies and juristic partnerships operating qualifying businesses in designated Special Economic Zones. Royal Decree No. 797, issued under the Revenue Code on the Reduction of Tax Rates B.E. 2568 (2025), was published in the Royal Gazette on 5 June 2025 and took effect on 6 June 2025. The Royal Decree reduces the corporate income tax rate from the standard 20 percent to 10 percent on qualifying net profits for eligible taxpayers carrying on targeted activities in Thailand’s Special Economic Zones.
The incentive applies for ten consecutive accounting periods and is intended to promote investment in Thailand’s border-area Special Economic Zones. The implementing criteria were subsequently prescribed by the Director-General of the Revenue Department under Notification Regarding Income Tax No. 468, issued on 19 March B.E. 2569 (2026), with effect from 6 June 2025, the operative date of the Royal Decree.
Designated SEZ Provinces
The border-area Special Economic Zones covered by the incentive are located in ten provinces: Tak, Mukdahan, Sa Kaeo, Songkhla, Trat, Nong Khai, Narathiwat, Chiang Rai, Nakhon Phanom, and Kanchanaburi.
The incentive is not available to every business located in those provinces. It applies only to companies or juristic partnerships carrying on targeted businesses prescribed by the Special Economic Zone Development Policy Committee under the Regulation of the Office of the Prime Minister on the Development of Special Economic Zones B.E. 2564 (2021).
Figure 1. SEZ Tax Incentives & Eligibility Checklist.
Scope of the Tax Incentive
A qualifying taxpayer may apply a reduced corporate income tax rate of 10 percent on qualifying net profits for ten consecutive accounting periods. The first accounting period depends on the timing of the taxpayer’s notification to the Revenue Department. If an accounting period begins on or after the notification date, that accounting period is the first incentive period. If the taxpayer submits the notification during an accounting period, that same accounting period is treated as the first incentive period, even if it is shorter than twelve months.
This timing rule is important. Taxpayers should not assume that the ten-year period begins only from the next full accounting year. A mid-year notification may cause the current accounting period to count as the first incentive period.
Notification Requirement
To claim the reduced rate, the taxpayer must notify the Director-General of the Revenue Department in accordance with the prescribed rules, procedures, and conditions. The notification must be filed with either the Large Business Tax Administration Division or the Area Revenue Office where the taxpayer’s head office is located.
The notification requirement is more than an administrative formality. It determines the commencement of the incentive period and provides the Revenue Department with the basis to review the taxpayer’s eligibility, business activities, location, and accounting treatment.
Separate Accounting and Profit Calculation
Taxpayers must calculate net profit under Sections 65, 65 bis, and 65 ter of the Revenue Code. Where a taxpayer operates both qualifying SEZ businesses and non-qualifying businesses, it must calculate profits and losses separately for each business.
Common expenses that cannot be directly attributed to a specific business must be allocated in proportion to revenue. The taxpayer may file Form PND.50 under the same taxpayer identification number, but it must attach working papers showing the separation of each business.
Losses must also be separated. A loss from an SEZ business may offset only income from the same SEZ business. A loss from a non-SEZ business may not be used to offset income from an SEZ business.
This is one of the most important practical features of the regime. The incentive is not simply a lower tax rate. It requires accounting discipline, reliable working papers, appropriate expense allocation, and clear documentary support.
Eligibility Conditions
To qualify, a company or juristic partnership must satisfy all applicable conditions under the Royal Decree and Notification No. 468.
1. First, the taxpayer must have a place of business in the relevant SEZ, and that place of business must be a permanent building. If the taxpayer was registered before the effective date of the Royal Decree, the permanent building in the SEZ must represent an expansion of, or addition to, an existing place of business.
2. Second, the taxpayer must notify the Revenue Department of its intention to claim the incentive in accordance with the prescribed procedures.
3. Third, the taxpayer must not claim a full or partial corporate income tax exemption under the law on investment promotion. This prevents inappropriate stacking of the SEZ reduced rate with certain BOI corporate income tax privileges.
4. Fourth, the taxpayer must not claim the corporate income tax reduction or exemption for small and medium-sized enterprises under Royal Decree No. 530 B.E. 2554 (2011), as amended by Royal Decree No. 564 B.E. 2556 (2013) and Royal Decree No. 583 B.E. 2558 (2015).
5. Fifth, the taxpayer must not claim the previous corporate income tax reduction granted to companies or juristic partnerships having a place of business in a Special Economic Development Zone under Section 4 of Royal Decree No. 591 B.E. 2558 (2015) or Section 4 of Royal Decree No. 693 B.E. 2563 (2020).
6. Sixth, the taxpayer must prepare separate accounts for businesses entitled to the SEZ tax incentive and businesses not entitled to the incentive.
If the taxpayer fails to satisfy any required condition in an accounting period, its entitlement to the corporate income tax reduction ceases from that accounting period onward.
Practical Compliance Considerations
Companies considering the incentive should review eligibility before making the notification. In practice, this means confirming the SEZ location, the existence and status of the permanent building, the targeted business activity, the taxpayer’s use of other tax incentives, and the accounting system required to separate qualifying and non-qualifying income.
For existing companies, particular care should be taken to evidence that the SEZ place of business constitutes an expansion or addition to an existing business, rather than a merely nominal address.
Taxpayers should also prepare internal working papers before filing the annual corporate income tax return. These should show revenue by business, direct expenses by business, the basis for allocating common expenses, losses by business, and the computation of qualifying net profits subject to the 10 percent rate.
If the incentive is incorrectly applied, or if the taxpayer fails to comply with the required conditions, the Revenue Department may adjust income or expenses, deny or revoke the incentive, and assess tax retroactively, together with applicable surcharges and penalties.
Figure 2. SEZ Tax Incentive Compliance Process.
Key Takeaway
Royal Decree No. 797 provides a meaningful tax incentive for businesses operating targeted activities in Thailand’s Special Economic Zones. However, the benefit is conditional and compliance-heavy. Companies should not treat the measure as a simple location-based tax reduction. The incentive requires proper notification, eligible business activities, a qualifying SEZ presence, careful review of incompatible incentives, and robust separate accounting.
For investors, the reduced 10 percent corporate income tax rate may materially improve project economics. For tax and finance teams, the main challenge will be demonstrating that the qualifying profits have been correctly identified, calculated, and supported.
This article is provided for general informational purposes only and does not constitute legal, tax, or professional advice. Readers should seek advice based on their specific circumstances before acting on this information. For assistance with corporate income tax incentives for businesses in Thailand’s Special Economic Zones, please contact Mahanakorn Partners Group (MPG) at [email protected].