Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

June 9, 2023
2023-1037

Thailand BOI announces new measure for companies impacted by global minimum tax under the BEPS 2.0 Pillar Two project

  • The Board of Investment of Thailand (BOI) has announced a new measure to alleviate potential impacts from the implementation of BEPS 2.0 Pillar Two on existing tax incentive programs and uphold Thailand's attractiveness as an investment destination for multinational enterprises (MNEs).
  • The new measure applies to both existing BOI-promoted companies and new BOI applicants with consolidated group revenue of not less than THB 28,000 million / EUR 750 million or falling within the scope of a Country-by-Country Report.
  • In-scope MNEs with existing BOI incentives and/or those with a plan to apply for new BOI incentives should (i) perform an impact assessment on Pillar Two to determine whether their effective tax rate for Thailand could fall below 15%, and (ii) undertake a tax-incentive feasibility study by revisiting their BOI tax profile to determine whether the MNE should consider converting to or applying for the new corporate income tax reduction regime.

Detailed discussion

The Board of Investment of Thailand (BOI) announced a relief measure with immediate effect for both existing BOI companies and new BOI applicants with consolidated group revenue of not less than THB 28,000 million/EUR 750 million or falling within the scope of a Country-by-Country Report.

This relief measure aims to alleviate potential impacts of the global minimum tax and uphold Thailand's attractiveness as an investment destination for MNEs.

The new incentive package is summarized below:

 

Existing BOI promoted companies

New BOI applicants

Alternatives for qualified investors

Option to convert from their current tax exemption regime to a 50% reduction of normal corporate income tax rate regime, resulting in a reduced corporate income tax rate of 10%

Option to choose between:

  • "Tax exemption regime" with the flexibility to subsequently convert to the tax reduction regime
  • "Tax reduction regime"

Period

Twice the remaining full-year incentive period, but capped at 10 years

Tax exemption regime:

  • Standard tax exemption period depending on the type of BOI activities

Tax reduction regime:

  • Twice the standard incentive period, with a maximum cap of 10 years

Start date

From the date revenue is first generated after receiving a new BOI certificate

From the date revenue is first generated

Other rights and incentives

Remain unchanged

Same as those under the basic incentive package

Key conditions and criteria

  1. The applicant must be an MNE group company with a consolidated revenue of not less than THB 28,000 million/EUR 750 million or be subject to the Country-by-Country Report requirement for the accounting period prior to the application.
  2. The applicant must be eligible for or currently enjoying the basic BOI incentive without any add-on special incentive regimes (e.g., production efficiency improvement, etc.)
  3. For an existing BOI-promoted company, the applicant must have a remaining corporate income tax exemption period of at least one year, and the cumulative amount of corporate income tax exemption must not have reached the capped amount.
  4. The applicant is required to comply with relevant application procedures.

The BOI may later release additional guidelines and relevant clarifications.

Implications

In-scope MNEs with existing BOI incentives and/or those with a plan to apply for new BOI incentives are recommended to conduct a Pillar Two impact assessment to determine whether their effective tax rate for Thailand could fall below 15%, resulting in the imposition of Top-Up Taxes once Pillar Two is implemented. In such cases, MNEs should consider undertaking a tax incentive feasibility study, which should involve a review of their BOI tax profile and an assessment of their eligibility, to determine whether it would be beneficial and whether timing is appropriate for the MNEs to convert to or apply for the new corporate income tax reduction regime.

____________________________

For additional information concerning this Alert, please contact the following:

EY Corporate Services Limited, Bangkok

Ernst & Young LLP (United States), Thai Tax Desk, New York

Ernst & Young LLP (United States), ASEAN Tax Desk, New York

Ernst & Young LLP (United States), Asia Pacific Business Group, New York

Ernst & Young LLP (United States), Asia Pacific Business Group, Chicago

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more