September 23, 2025

Thailand Cabinet Approves Draft Competitiveness Enhancement for Targeted Industries Act to Mitigate Impact of Top-Up Tax

Introduction

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.^[1]

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.

Who 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.

How Alvarez & Marsal Can Help

Alvarez & Marsal Thailand provides expert guidance to help businesses identify and capitalize on investment opportunities in Thailand. Our team of seasoned professionals can support clients in navigating the new incentive framework by assessing eligibility for refundable tax credits and reviewing current and planned investments in the supported areas. Once the Draft Act takes effect, we can offer strategic guidance on optimizing these incentives, assist in preparing the necessary documentation, and help clients plan for both tax relief and liquidity benefits under the National Competitiveness Enhancement for Targeted Industries Act.

In addition to the services mentioned above, we assist clients in reviewing business and investment plans, conducting feasibility studies to assess eligibility for promoted activities, and providing practical insights to maximize the benefits of BOI incentives. Our support extends to preparing investment promotion applications, compiling the necessary supporting documentation, liaising with BOI officials, and monitoring application progress to help ensure a successful outcome.

For more information, please contact us at Alvarez & Marsal Thailand to explore how we can help your organization prepare for this new incentive framework and pursue investment opportunities in Thailand.

Sources:

^[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

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