Thailand’s historical tax‑incentive regime relied heavily on corporate income‑tax (CIT) exemptions offered by the Board of Investment (BOI) to attract foreign investors. Under the OECD/G20 Pillar‑Two rules, large multinational enterprise groups (MNEs) with consolidated revenue above €750 million must pay an effective tax rate (ETR) of at least 15% in every jurisdiction where they operate. This global minimum tax (GMT) takes effect for accounting periods starting 1 January 2025 and will be enforced in Thailand via the Emergency Decree on Top‑Up Tax B.E. 2567 (2024) and the associated secondary regulations. The decree implements a domestic top‑up tax (ensuring Thai operations are taxed at 15%) and an income‑inclusion rule (taxing profits earned by Thai entities in low‑tax jurisdictions). The Revenue Department emphasizes that subordinate legislation will provide detailed rules on calculations, reporting and safe harbors.
In late 2025 and early 2026, the BOI and the Ministry of Finance confirmed that tax incentives will not be abolished but restructured to align with the GMT. A new Qualified Refundable Tax Credit (QRTC) mechanism will allow qualifying expenditures (e.g., R&D, skill development and productivity‑enhancement projects) to be treated as refundable tax credits instead of tax holidays. The QRTC will coexist with existing incentives, so investors outside the scope of Pillar‑Two may continue using traditional exemptions.
Below is an update on how these developments affect BOI‑promoted entities and capital gains, along with key implications for investors.
2026 Developments
1. Emergency Decree and Draft Secondary Legislation
✓ The Emergency Decree on Top‑Up Tax took effect on 26 December 2024 and applies to accounting periods beginning 1 January 2025. The decree authorizes the Revenue Department to collect a top‑up tax from both Thai and foreign MNEs if their ETR falls below 15%.
✓ Four draft ministerial regulations (submitted in December 2025 and still pending finalization as of early 2026) detail calculation methods, safe‑harbor thresholds and compliance procedures for the top‑up tax. The rules adopt OECD definitions (including qualified domestic minimum‑top‑up tax, income‑inclusion rule and undertaxed profits rule) and are designed to mirror the OECD Model Rules.
✓ According to legal commentary, once the regulations are enacted, MNEs enjoying BOI tax holidays or other exemptions will not be able to reduce their ETR below 15%; the top‑up tax will be levied to bridge the gap. Therefore, MNEs must budget for additional tax liabilities even if their projects enjoy CIT exemption under BOI promotion.
2. BOI’s Response – Maintaining Competitiveness
✓ Continuation of existing incentives: The BOI clarified that standard tax exemptions and reductions remain available for projects not subject to the GMT. This means SMEs or groups below the revenue threshold can still enjoy full tax holidays.
✓ Introduction of QRTC: The BOI and Ministry of Finance are developing the Qualified Refundable Tax Credit, which will allow qualifying expenditures—such as R&D, workforce training, standards upgrading and efficiency‑improvement investments—to be converted into refundable tax credits. These credits can offset top‑up tax and CIT; unused credits may be refunded, providing cash‑flow support. While detailed regulations are pending, initial guidance indicates that the QRTC will coexist with current incentives; investors may choose between existing CIT exemptions (subject to top‑up tax) and the QRTC.
✓ Alternative CIT reduction: Advisory interpretations of BOI Announcement No. 1/2023 suggest that MNEs can elect to convert their CIT exemption into a 50% CIT reduction for up to twice the remaining exemption period (subject to a 10‑year cap). This results in an effective tax rate of roughly 10%—still below 15%, so the top‑up tax would apply to reach 15%. The reduction is intended to mitigate the impact of top‑up tax while preserving some incentive value.
3. Impact on Corporate and Capital Gains Tax for BOI‑Promoted Entities
Corporate income tax (CIT):
✓ Prior to Pillar‑Two, BOI‑promoted companies could enjoy up to eight years of CIT exemption and additional reductions. Under the Emergency Decree, BOI‑promoted MNEs with revenue ≥ €750 million must now ensure their effective tax rate in Thailand is at least 15%. If they benefit from a tax holiday or reduction that lowers the rate below 15%, a domestic top‑up tax will be imposed to reach the 15% floor.
✓ Smaller enterprises below the revenue threshold remain outside the scope of the top‑up tax and can continue enjoying full BOI CIT exemptions.
Capital gains tax (CGT):
✓ Thailand does not levy a separate CGT on companies; gains on disposal of shares or assets are included in taxable profits and subject to CIT at 20% (or 15% for mutual funds). The Emergency Decree does not introduce a specific capital gains tax. However, for MNEs subject to Pillar‑Two, capital gains realized by a Thai entity form part of accounting profit when computing the effective tax rate. If CIT exemptions reduce the ETR below 15%, a top‑up tax will apply. Thus, capital gains may indirectly trigger top‑up tax, but there is no standalone CGT update.
4. Key Issues for Investors and BOI Companies
| Issue | Implication |
|---|---|
| Existing BOI tax holidays may no longer deliver zero tax | MNEs above the Pillar‑Two threshold must pay at least 15% ETR. CIT exemptions will be overridden by a domestic top‑up tax. Companies should model the impact on projected returns and consider switching to CIT reductions or QRTC credits. |
| Uncertainty about secondary rules | The four draft regulations have not yet been promulgated. Pending issues include administrative safe harbours, treatment of deferred tax assets, currency conversion, and coordination with foreign jurisdictions. Investors should monitor Revenue Department announcements and seek expert advice. |
| Selecting the appropriate incentive | Investors need to evaluate whether continuing with a BOI tax holiday, converting to a 50% CIT reduction, or applying for QRTC credits provides the best net benefit. The choice will depend on project profitability, qualifying expenditures and expected top‑up liability. |
| Impact on capital gains | While no specific CGT is introduced, capital gains included in accounting profits will increase the effective tax base for Pillar‑Two calculations. Investors planning asset or share disposals should model the resulting ETR and potential top‑up tax. |
| Compliance and reporting | The Emergency Decree requires MNEs to file additional documentation demonstrating compliance with the global minimum tax. Quarterly monitoring of investment projects and more stringent reporting obligations are expected. Companies should upgrade tax reporting systems and maintain detailed reconciliations between accounting profit and taxable profit. |
Conclusion and Outlook
Thailand’s adoption of the OECD/G20 Pillar‑Two rules marks a significant shift in its investment‑incentive regime. The Emergency Decree on Top‑Up Tax ensures that large MNEs operating in Thailand pay an effective tax rate of at least 15%, effectively overriding CIT exemptions for companies subject to the global minimum tax. To maintain competitiveness, the BOI will continue to offer traditional tax holidays and reductions, while developing a Qualified Refundable Tax Credit scheme that rewards productivity‑enhancing investments.
Corporate investors should evaluate the financial impact of the top‑up tax, monitor the final form of secondary legislation, and consider alternative incentives such as CIT reductions or QRTC credits. Although Thailand still does not have a separate corporate capital gains tax, capital gains will be included in the effective tax rate calculation for Pillar‑Two purposes, potentially triggering top‑up tax. Close monitoring of regulatory developments and proactive tax planning will be critical to maximizing the benefits of BOI promotion in the era of the global minimum tax.