Thailand Top-Up Tax 2025: Draft Competitiveness Bill, QRTC & BOI Incentive Changes

Thailand’s approach to international taxation is undergoing a significant transformation. On 2 September 2025, the Thai Cabinet approved in principle the draft National Competitiveness Enhancement for Targeted Industries Act, a landmark measure designed to support multinational enterprises (MNEs) affected by the country’s newly implemented top-up tax. This article explains what the top-up tax means for businesses operating in Thailand, how the new competitiveness bill works, and what steps companies should take to remain compliant while maximising available incentives.

For businesses looking to register a company in Thailand or expand existing operations, understanding these changes is essential to strategic tax planning in 2025 and beyond.

What Is the Top-Up Tax in Thailand?

Thailand’s top-up tax stems from the OECD Pillar Two Global Anti-Base Erosion (GloBE) Rules, which establish a global minimum effective tax rate of 15 percent for large multinational enterprise groups. Thailand formally adopted these rules through the Emergency Decree on Top-Up Tax B.E. 2567 (2024), effective from 1 January 2025.

The top-up tax applies to MNE groups with consolidated annual revenue of at least EUR 750 million in at least two of the four preceding fiscal years. Where an MNE’s effective tax rate (ETR) in Thailand falls below 15 percent, a top-up tax is levied to bridge the gap.

This directly impacts companies that have historically benefited from Board of Investment (BOI) tax holidays and corporate income tax exemptions, which may have reduced their effective rate well below the 15 percent threshold.

Draft Competitiveness Enhancement for Targeted Industries Act

To help businesses navigate this new tax landscape, the Thai Cabinet approved a draft bill that revises the existing National Competitiveness Enhancement for Targeted Industries Act B.E. 2560 (2017). The key innovation is the introduction of the Qualified Refundable Tax Credit (QRTC), a mechanism recognised by the OECD as compatible with Pillar Two rules.

The QRTC is a significant departure from traditional BOI incentives. Rather than offering tax exemptions that reduce a company’s effective tax rate below 15 percent, the QRTC provides refundable credits that do not trigger additional top-up tax liability. This means companies can still receive meaningful government support without falling afoul of the global minimum tax rules.

How the QRTC Works

Under the draft bill, eligible promoted companies receive tax credits based on qualifying investments or expenditure in the following areas:

• Research and development (R&D) conducted in Thailand
• Advanced skills development and workforce training programmes
• Production efficiency improvement including automation and technology upgrades
• Sustainable investment aligned with environmental and ESG standards

These credits can be applied against corporate income tax, top-up tax, and other tax liabilities. Crucially, if a promoted company has remaining unused credits, it may claim a cash refund within four years in accordance with criteria established by the BOI. This cash refund mechanism provides direct liquidity support to businesses, making it particularly attractive for capital-intensive industries.

Secondary Legislation: Four New Regulations Approved

On 30 December 2025, the Thai Cabinet further approved four pieces of draft secondary legislation to support the operational implementation of the top-up tax framework. These regulations address:

1. Restructured MNE groups – criteria for determining which restructured entities are subject to top-up tax
2. Non-constituent entities – rules for identifying entities excluded from the MNE group scope
3. Undertaxed Payments Rule (UTPR) – allocation methodology for top-up tax under the UTPR mechanism
4. Income and expense adjustments – detailed rules for adjusting income, expenses, and covered taxes when calculating the top-up tax

These regulations provide the technical framework that companies and their accounting advisors will need to follow when determining their top-up tax obligations.

Impact on BOI-Promoted Companies

The introduction of the top-up tax has fundamentally changed the value proposition of traditional BOI incentives for large MNEs. Previously, BOI-promoted companies in targeted industries could enjoy corporate income tax exemptions for up to 13 or even 15 years. While these exemptions remain available, they may now trigger top-up tax for in-scope MNEs, effectively neutralising the tax benefit.

The BOI has clarified that existing tax incentives will continue to be offered. However, for MNEs subject to the Emergency Decree on Top-Up Tax, the new QRTC mechanism provides an OECD-compliant alternative that preserves the economic benefit of investment promotion without the top-up tax consequences.

Companies that are not subject to the top-up tax (those with consolidated revenue below EUR 750 million) can continue to benefit from traditional BOI incentives without any changes.

Key Considerations for Foreign Investors in Thailand

For multinational companies operating or planning to invest in Thailand, several practical considerations arise from these regulatory changes:

Tax structure review: Companies should review their existing tax structures to determine whether they fall within the scope of the top-up tax. This includes assessing consolidated group revenue against the EUR 750 million threshold and calculating the effective tax rate across all Thai operations.

BOI incentive strategy: MNEs currently benefiting from BOI tax holidays should evaluate whether transitioning to the QRTC mechanism would provide better overall value, particularly if their current exemptions are reducing the effective tax rate below 15 percent.

Compliance planning: The four new secondary regulations introduce detailed compliance requirements. Working with experienced tax advisors in Thailand is essential to ensure proper classification of MNE group entities and accurate calculation of top-up tax obligations.

Investment timing: Companies planning new investments in R&D, workforce development, or sustainable infrastructure should consider structuring these investments to qualify for QRTC benefits. Proper documentation and BOI application procedures are critical.

Timeline of Thailand’s Top-Up Tax Implementation

Understanding the chronological development helps businesses plan their compliance strategy:

• 2024 – Emergency Decree on Top-Up Tax B.E. 2567 enacted
• 1 January 2025 – Top-up tax becomes effective for accounting periods starting on or after this date
• 2 September 2025 – Cabinet approves draft Competitiveness Enhancement for Targeted Industries Act (QRTC framework)
• 12 November 2025 – BOI formally announces QRTC mechanism as an alternative to traditional tax incentives
• 30 December 2025 – Cabinet approves four pieces of secondary legislation for top-up tax implementation

How Lex Bangkok Can Help

Navigating Thailand’s evolving tax landscape requires specialist legal and tax advisory support. At Lex Bangkok, our team assists multinational enterprises with:

• Top-up tax impact assessments and effective tax rate calculations
• BOI investment promotion applications and QRTC eligibility reviews
• Company registration and corporate structuring for tax efficiency
• Ongoing accounting and tax compliance services
• Coordination with the Revenue Department and BOI on regulatory matters

Whether you are an existing investor reassessing your tax position or a new entrant evaluating Thailand as an investment destination, our advisors can help you develop a compliant and optimised strategy.