Thailand Cabinet Approves Draft Competitiveness Enhancement For Targeted Industries Act To Mitigate Impact Of Top-Up Tax

On September 2, 2025, the Thai Cabinet approved in principle the draft National Competitiveness Enhancement for Targeted Industries Act (Draft Act), aimed at mitigating the impact of the recently introduced Top-Up Tax.

Thailand Tax

Introduction

The Top-Up Tax requires large multinational enterprises (MNEs) and affiliated entities operating in Thailand, with consolidated group revenue of at least EUR 750 million in at least two of the past four fiscal years, to pay a global minimum tax (GMT) of 15% in line with the Organization for Economic Co-operation and Development (OECD)'s Pillar 2 framework. The Draft Act aims to mitigate the above Top-Up Tax which came into effect on January 1, 2025.

Below is an overview of the key provisions of the Draft Act:

Overview of the Draft Act's Provisions

Key Provisions	Details
Qualified Refundable Tax Credits (QRTC)	Board of Investment (BOI)-promoted companies subject to the Pillar 2 framework will be entitled to tax credits for qualifying expenditures, including those related to: - Research and development (R&D) - Advanced skills development - Improvements in production efficiency - Sustainable investment initiatives
Utilization of Tax Credits	BOI-promoted companies can use the tax credits to offset their tax liabilities. Unused tax credits may be refunded in cash from the Competitiveness Enhancement Fund within a specified period.
Administration	BOI-promoted companies will need to submit requests for refunds to the BOI. A newly established commission will oversee the approval of refunds and disbursements from the Competitiveness Enhancement Fund.
Enforcement and Compliance	The commission may revoke improperly granted or misused tax credit rights, including retroactive revocation.

ho Are Likely to Benefit from This Draft Act

MNEs and affiliated entities operating in Thailand that are impacted by the Top-Up Tax under the Pillar 2 framework may be eligible to benefit from this incentive framework, which provides both tax relief and liquidity support through refundable tax credits. These companies should begin:

Assessing their eligibility for the new tax credit measures
Reviewing current and planned investments in R&D, training, production efficiency, and sustainability
Monitoring the legislative process and forthcoming BOI guidelines on implementation

The Office of the Council of State will now review the Draft Act for legal and textual accuracy. Following this review, the Act will be submitted to the House of Representatives for further deliberation. The timeframe for enactment is uncertain, so the legislative process should be closely monitored.

Footnote

1 "Cabinet approves support for firms hit by new tax," Bangkok Post, September 3, 2025, https://www.bangkokpost.com/business/general/3097681/cabinet-approves-support-for-firms-hit-by-new-tax

Originally published 23 September 2025

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Thailand Cabinet Approves Draft Competitiveness Enhancement For Targeted Industries Act To Mitigate Impact Of Top-Up Tax

Contributor

Introduction

Overview of the Draft Act's Provisions

ho Are Likely to Benefit from This Draft Act

Tax

Contributor

Thailand