Thailand to impose top-up tax from January 1
Under the new rule, multinationals stationed in Thailand will have to make up the difference in the corporate tax they pay to 15%
The Royal Gazette website on Thursday published a royal decree for the top-up tax on multinational corporations operating in Thailand, to come into effect on January 1.
The top-up tax is a mechanism designed to ensure that multinational corporations pay a minimum level of corporate income tax, typically aligned with the global minimum tax (GMT) initiative led by the Organisation for Economic Co-operation and Development (OECD).
If a multinational corporation pays corporate income tax at a rate below 15%, it will need to pay the difference (to reach 15%) in the country where its parent company is headquartered. Thailand’s imposition of top-up tax will allow corporations to pay the difference in the kingdom instead.
The reason for the promulgation of this royal decree is the Global Anti-Base Erosion (GloBE) rules, which are an internationally agreed framework among member countries of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS). The objective is to ensure that the effective tax rate of large multinational enterprises operating in each country is not less than 15%.
“In order to protect Thailand's interests in collecting additional taxes arising within the country and to preserve Thailand's right to levy taxes on additional taxes arising abroad, it is necessary to begin calculating the top-up taxes starting from the year 2025. This constitutes an urgent and unavoidable situation, essential for maintaining the economic stability of the country,” said the Royal Decree.
Earlier, Deputy Finance Minister Julapun Amornvivat estimated that the top-up tax would help increase state revenue by over 10 billion baht per year.
