On January 13, 2025, Thailand’s Cabinet approved a draft Royal Decree under the Revenue Code, introducing corporate income tax (CIT) reductions to attract investment into Thailand’s Special Economic Zones (SEZs). Proposed by the Ministry of Finance, this measure aims to stimulate economic activity, enhance cross-border trade, and strengthen Thailand’s position as a regional investment hub. The draft decree will now undergo further review by the Office of the Council of State before implementation.
Special Economic Zones (SEZs) in Thailand
Thailand has designated 10 SEZs in strategically located provinces to promote industry, trade, and cross-border economic integration:
| 1 | Tak |
| 2 | Mukdahan |
| 3 | Sa Kaeo |
| 4 | Songkhla |
| 5 | Trat |
| 6 | Nong Khai |
| 7 | Narathiwat |
| 8 | Chiang Rai |
| 9 | Nakhon Phanom |
| 10 | Kanchanaburi |
Key Tax Incentives Under the Royal Decree
1. Corporate Income Tax (CIT) Reduction
✓ Businesses operating within SEZs will benefit from a reduced CIT rate of 10% (down from the standard 20%) for a period of 10 accounting years.
✓ The tax reduction applies to income derived from manufacturing and service activities conducted within the SEZs.
✓ Companies remain eligible regardless of their head office location as long as their operations are physically based within an SEZ.
✓ The first accounting year for CIT incentives starts from the date of the official notification to the Revenue Department.
2. Business Establishment Requirements
To qualify for these tax incentives, businesses must comply with the following conditions:
✓ Operate from a permanent structure within the SEZ.
✓ Expand or modify existing facilities into permanent buildings if the business was established before the decree.
✓ Register for SEZ tax benefits with the Revenue Department and comply with future reporting regulations.
✓ Maintain separate financial records for tax-incentivized and non-incentivized activities.
3. Restrictions on Claiming Other Tax Benefits
Businesses receiving the 10% CIT reduction under the SEZ program cannot simultaneously claim:
✓ Tax exemptions under the Investment Promotion Act (BOI incentives).
✓ SME tax deductions under Royal Decree No. 530 B.E. 2554, amended by No. 583 B.E. 2558.
✓ Other tax reliefs granted under Royal Decree No. 591 B.E. 2558 or No. 693 B.E. 2563.
4. Revocation of Tax Benefits
✓ Failure to meet the eligibility criteria in any accounting period results in an immediate loss of tax privileges from that period onward.
✓ Businesses must continuously comply with SEZ tax regulations to retain their benefits.
Strategic Implications for Investors
The proposed tax incentives aim to:
✓ Attract Foreign and Domestic Investment – Lower corporate tax rates create an investor-friendly environment for multinational and regional companies.
✓ Boost Manufacturing & Services in SEZs – Increased capital inflows will expand production capacity and service industries.
✓ Strengthen Thailand’s Economic Position – SEZs will play a pivotal role in Thailand’s cross-border trade and regional supply chains.
✓ Create Employment & Economic Growth – New investments will drive job creation and regional economic development.
The reduction in corporate income tax to 10% for 10 years positions Thailand’s SEZs as highly competitive investment destinations in ASEAN. While the incentives provide significant financial benefits, businesses must ensure strict compliance with the eligibility criteria to avoid disqualification. Investors considering SEZ opportunities should conduct careful tax and legal planning to maximize incentives while adhering to Thailand’s regulatory framework.
Mahanakorn Partners Group (MPG) continues to monitor legal developments and is available to provide expert guidance on tax optimization strategies, SEZ investment planning, and regulatory compliance. Investors interested in Thailand’s SEZ tax incentives are encouraged to seek professional advisory services to ensure compliance and capitalize on available benefits.
For further insights or legal consultation on SEZ investment, please contact MPG’s corporate and tax law experts.