The country’s finance minister announced the plans on local television today (Friday 13 December). Credits: Bloomberg/Getty Images

Thailand’s Finance Minister Pichai Chunhavajira announced the country will apply a 15% minimum corporate tax rate starting in January 2025, Bloomberg reported. The tax rate will only apply to companies with an annual turnover of $750mn.

The country is changing its laws to comply with the OECD global tax deal as it seeks admission into the organization in the coming years. In 2021, almost 140 countries agreed to set a minimum corporate tax of 15% for companies with an annual turnover of $750mn to prevent tax competition and halt cross-border tax avoidance.

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The tax would be a reduction from the current 20% corporate tax in Thailand. Many companies, however, are exempted through tax exemptions for up to 13 years through incentives from the country’s Board of Investment.

“These companies will need to pay taxes to their origin countries anyways even if they get exemption or 5% tax rate here,” Pichai said as he announced the tax regime in a televised address.

“We also agree to give back some of the tax collection to them,” he added.

To relieve part of the tax burden, the government will compensate companies if they move research to Thailand, make their local operations more environmentally friendly or offer skills training to the local workforce, Pichai explained.

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In July, Reuters reported that neighbouring Vietnam was finalising plans for a fund to attract foreign investment after the country implemented the 15% corporate tax rate. While, like Thailand, the tax rate used to be 5% greater, multinationals enjoyed many exemptions and incentives.