The cabinet on Tuesday approved in principle the draft of the National Competitiveness Enhancement for Targeted Industries Bill to counteract the effects of the so-called Top-Up Tax.
The Top-Up Tax is a mechanism aimed at ensuring that multinational corporations pay at least a minimum level of corporate income tax, aligned with the global minimum tax (GMT) initiative led by the OECD.
According to Chusak Sirinil, the Minister for the Prime Minister’s Office, the draft legislation seeks to ease the burden on businesses impacted by the implementation of the Top-Up Tax.
Thailand introduced an emergency decree on the Top-Up Tax in 2024, which will take effect from January 1, 2025. The tax applies to large multinational companies and affiliated entities with a consolidated revenue of at least €750 million (roughly 30 billion baht) over at least two fiscal years within the past four years.
Entities meeting these criteria will be subject to the Top-Up Tax and must pay GMT at a rate of 15% starting from the 2025 tax year. This move aligns with Thailand’s compliance with Pillar 2 of the OECD’s GMT framework.
Key aspects of the draft law include provisions related to tax credits and benefits. Eligible companies involved in targeted industries will be granted tax credits based on their investments or expenditures in areas such as research and development, advanced skills training, efficiency improvements, and sustainable investments—aimed at boosting their competitiveness.
These tax credits can be applied to offset various tax liabilities, and if companies have remaining credits, they can also apply for cash refunds, providing liquidity for business growth.
Promoted companies can submit requests to the Office of the Board of Investment (BoI) to receive a cash refund for any unused tax credits within a timeframe set by the new commission overseeing the scheme.
This commission also has the authority to approve the disbursement of refunds from the Competitiveness Enhancement Fund, which the government must sufficiently allocate to ensure availability of cash refunds.
If any tax credits or benefits are improperly granted or utilized, the commission has the power to revoke them. Such revocations can be applied retroactively to the relevant tax years, with applicable tax laws appropriately enforced.
Additionally, the Office of the BoI is empowered to coordinate with the Ministry of Finance, the supervising authority of tax collection, to request relevant information related to tax collection activities.