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Thailand’s Tax Incentive Regime and Pillar Two

In this article, we take a look at Thailand’s tax regime from a Pillar Two perspective, with a particular focus on their tax incentives. 

Corporate Income Tax Rates

The Income Tax Rates Schedule to the Revenue Code provides that the standard rate of corporate income tax is 20%. However, Thailand offers a number of reduced rates under the Investment Promotion Act

Key reduced rates include:
 
  • a 50% reduction in the corporate income tax rate for 10 years under Section 32 of the Investment Promotion Act. This applies to various specified industries including digital and creative industries and research and development activities;
 
  • a 50% reduction in the corporate income tax rate for 5 years under Section 35 of the Investment Promotion Act for investments in special economic zones.
 
  • Specific rates for international business companies that include:
 
  1.  A 3% rate if the IBC incurs at least Baht 600m in expenditure locally per annum.
  2. A 5% rate if the IBC incurs at least Baht 300m in expenditure locally per annum.
  3. An 8% rate if the IBC incurs at least Baht 60m in expenditure locally per annum.
 

Therefore, whilst the main corporate income tax rate is set at a medium level internationally, entities that benefit from a 15% (or lower) rate could easily see a GloBE ETR of below 15%, particularly if financial accounting/GloBE income differs significantly from taxable income (see below).  

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