Caretaker Cabinet approves four draft laws to implement Global Minimum Tax

The caretaker Cabinet on Tuesday approved two draft royal decrees and two draft ministerial regulations to implement the Global Minimum Tax agreement, which the government said would raise tax revenue by about 12 billion baht a year, according to government spokesman Siripong Angkasakulkiat.

Siripong said the four drafts would take effect once published in the Royal Gazette.

He said the measures are subordinate legislation under the Executive Decree on Top-Up Tax, B.E. 2567 (2024), aimed at enforcing the Global Minimum Tax agreement.

Four draft measures approved

The four drafts are:

• Draft Royal Decree on the criteria for considering liability to additional tax for groups of multinational legal entities undergoing corporate restructuring, together with an explanatory note (principles and rationale) and a summary analytical note.
• Draft Royal Decree prescribing legal entities that are not related legal entities, together with an explanatory note (principles and rationale) and a summary analytical note.
• Draft Ministerial Regulation, issued under the Executive Decree on Top-Up Tax, B.E. 2567 (2024), on the allocation of residual additional tax received by Thailand to related legal entities established in Thailand, together with an explanatory note (principles and rationale) and a summary analytical note.
• Draft Ministerial Regulation, issued under the Executive Decree on Top-Up Tax, B.E. 2567 (2024), on adjustments to income, expenses and taxes within scope for the calculation of additional tax, together with an explanatory note (principles and rationale) and a summary analytical note.

Siripong said the four draft laws would not create a budget burden that would bind the next government after the election, as they are expected to generate about 12 billion baht a year in additional revenue.

Expected benefits and impacts

Siripong said the benefits and impacts would include:

• Enabling Thailand to collect additional tax in line with the projected target of 12 billion baht per year.
• Aligning Thailand’s additional tax legislation with international standards.
• Significantly reducing base erosion and profit shifting (BEPS) by multinational companies at both national and global levels.
• Significantly reducing international competition in corporate income tax, supporting Thailand’s investment promotion efforts on the basis of fiscal sustainability.

What is the Global Minimum Tax?

The Global Minimum Tax (GMT) is an international agreement designed to ensure large multinational corporations pay at least a 15% effective tax rate on their profits, regardless of where they operate.
Spearheaded by the OECD and backed by more than 140 countries, it aims to end the “race to the bottom”, in which countries cut corporate tax rates to attract foreign investment.

How the “top-up tax” works

The GMT is implemented under the OECD’s Pillar Two framework. It does not require every country to set its domestic corporate tax rate at 15%, but instead applies “top-up” rules to close any gap.

• Top-up mechanism: If a company headquartered in Country A has a subsidiary in Country B paying only 5% tax, Country A can impose a 10% top-up tax to bring the total to 15%.
• Qualified Domestic Minimum Top-up Tax (QDMTT): Some low-tax jurisdictions choose to levy the additional amount themselves, so the revenue is collected locally rather than by the company’s home country.