PwC Thailand Spotlight Podcast series

A deep dive into Thailand’s tax outlook for 2025

Podcast
19 minute read
07 Mar 2025

With significant developments in international tax laws in Thailand, it’s more important than ever for businesses and taxpayers to review and enhance their tax management and tax governance for compliance. What can businesses expect in terms of tax audits, and what should they keep an eye on in the coming years? Find out in this podcast.

07/03/25

Guest
Transcript

Guest

Niphan Srisukhumbowornchai
Tax and Legal Leader, PwC Thailand
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Transcript

Piyanat Suanapai
PwC Thailand Spotlight, insights on business and industry trends in Thailand and beyond.

Hello, I’m Piyanat Suanapai, your podcast host.

One of the focus areas that businesses should regularly monitor is changes to laws and taxes. In recent times, we’ve seen significant changes in Thailand’s tax laws, impacting business operations domestically and internationally.

Today, we have Niphan Srisukhumbowornchai, Tax and Legal Leader, PwC Thailand with us to discuss Thailand’s tax outlook for 2025 and beyond. We’ll explore tax and legal challenges that businesses and taxpayers should be aware of so they can effectively plan their tax management in line with their business strategies.

Hello Niphan.

Niphan Srisukhumbowornchai
Hello.

Piyanat
Can you evaluate the outlook for Thailand’s tax measures in 2025? What direction do you think they’ll take, and what notable tax issues should businesses or taxpayers keep an eye on?

Niphan
Let me start by providing an overview of tax collection for the past year and this year. Last year, the tax collection target was set at THB2.5tn, but the Revenue Department collected around THB2.2tn, missing its target by about 10% or THB300bn. The target for 2026 has increased to THB2.6tn. Compared to last year’s actual collection, this represents a gap of about THB400bn.

The Revenue Department’s task is then to figure out where to source this additional THB400bn. Historically, the main taxes collected by the Revenue Department have come from various sources, with the most signification being value-added tax (VAT), followed by corporate income tax, currently set at 20% in Thailand. Additionally, when dividends are paid out, a withholding tax of 10% is applied, resulting in an effective tax rate of 28% for corporate income tax including dividends. The third is from personal income tax.

Based on the figures I explained earlier, the Revenue Department needs to increase tax collection by THB400bn. Even though this year’s GDP remains stable compared to last year, a noteworthy issue is the intensity of global trade, which affects domestic consumption.

For example, recent news about declining car sales is concerning, as last year’s domestic car sales were at their lowest in over a decade. This may impact the ability to meet VAT targets. Considering the automotive supply chain, when car sales decrease, VAT collection may fall short of expectations. Corporate income tax from car manufacturers is also likely to decrease, as production and sales figures throughout the industry decrease, affecting everything from car sales companies to parts suppliers. So, corporate tax collected from this industry would be lower. And this is just one industry.

Overall, while the economy may remain stable this year, or not as promising as last year, tax collection is set to increase. Therefore, the Revenue Department needs to find new tools to ensure tax audits and collections meet targets.

Now, let’s look at the Revenue Department’s operations. Tax audits are divided into two main types: informal and formal.

Informal audits, known as ‘advisory audits’, have been used for over ten years. In this type of audit, the Revenue Department sends letters to taxpayers notifying them of an upcoming site inspection. They review various reports and advise taxpayers on areas needing improvement. Taxpayers then amend their filings according to the Revenue Department’s recommendations, making this a relatively friendly process.

The other type is formal audits, which the tax community refers to as ‘audits by summons’. The Revenue Department uses its authority under the Revenue Code to summon taxpayers to undergo annual tax audits.

As mentioned earlier, the Revenue Department is looking for new tools to enhance the efficiency of tax audits and collections to meet targets. This aligns with Thailand’s aspiration to join the Organisation for Economic Co-operation and Development (OECD). Previously, we signed the inclusive framework agreement with the OECD to meet international standards. Now, Thailand is taking another step by applying for OECD membership. If successful, it would enhance Thailand’s international standing. However, there is a need for updating domestic regulations to align with OECD standards, particularly in tax matters.

In recent years, we’ve seen significant developments in international tax laws in Thailand. One example is transfer pricing, which is now enforced. Companies in Thailand with revenues exceeding THB200m and transactions with related entities must file a transfer pricing disclosure form and prepare transfer pricing documentation.

Another recent development is Pillar Two, or the global minimum tax (GMT), which took effect on 1 January this year. It mandates that groups with revenues exceeding EUR750m for two consecutive years comply with global minimum tax rules, requiring a minimum 15% tax in the investment country. If the tax paid is below 15%, a top-up tax must be paid.

These new laws, whether transfer pricing or Pillar Two, didn’t surprise me. Given the projected figures and new legislations, these are tools the Revenue Department will use to enhance tax collection efficiency this year.

Piyanat
Based on what you’ve just shared, everyone should now have a clearer picture of the main issues and developments that are emerging in Thailand. Can you elaborate on how these developments will affect businesses?

Niphan
In terms of tax audits, I think we’ll see an increase in audit activities.

In the short term, the Revenue Department will continue to use the Risk-Based Audit System (RBA). This system is an algorithm that analyses tax filings from all taxpayers. It connects with various datasets to assess which taxpayers are at risk of non-compliance with tax laws. The system is continually being developed, and from recent consultations with taxpayers, we’ve observed that it is becoming more accurate and efficient. Therefore, most companies will continue to use the RBA.

A new tool that the Revenue Department might soon implement is transfer pricing audits. Currently, the law requires businesses with sales exceeding THB200m and transactions with related entities to prepare a disclosure form and transfer pricing documentation. Taxpayers must prepare for this framework accordingly.

Next up is how the Revenue Department will use the information that taxpayers submit for audits. Guidelines for audits and tax assessment methods may be issued, making this tool effective for mid-term tax collection.

Looking further ahead, audits will relate to Pillar Two, or the GMT, which has already been enacted. Taxpayers will need to submit information to the Revenue Department in the next 15 to 18 months. After submission, the Revenue Department will take some time to design audit methods and procedural regulations, which may impact the long term, potentially in three to five years.

From a taxpayer’s perspective today, the focus should be on the Revenue Department’s increasingly efficient RBA system.

Another group of taxpayers is those who might face transfer pricing audits soon. If a company has transactions with related entities, regardless of their size, the company must be prepared, as this law applies to companies of all sizes.

Businesses should focus on these two areas. If any business is unsure about the accuracy of their systems, they need to seriously consider how to improve compliance, as taxes represent a significant cost.

I’d like to add to that, in the past, many companies believed they should plan their taxes so that they could pay the lowest rate. However, with international regulations like the global minimum tax mandating a minimum 15% tax rate for large multinational companies, it’s no longer viable for companies to seek the lowest possible tax rate. Smaller companies might still find room for tax planning, but it may not be worth the effort and cost, considering the need for expertise, advisors or investments. In other words, it’s often more straightforward for small companies; though compliance is another matter.

At the other end, large companies have previously engaged in tax planning strategies that resulted in a group tax rate as low as 4% to 5% of their total revenue. Maintaining a lower tax rate is a way to manage risk. Even if one of the countries in which they operated imposed a higher tax rate, it might only increase the group’s overall tax rate to 7% or 8%, which is still relatively low.

Today, with the introduction of the 15% global minimum tax, such strategies are no longer viable for large companies. Any shortfall below the 15% threshold would require them to pay top-up taxes, effectively bringing the rate up to the mandated minimum.

When comparing previous tax planning strategies to the current global minimum tax requirement, it’s clear that the former approach of maintaining tax rates at 4% to 8% falls significantly short of the 15% minimum. As a result, companies can no longer focus solely on achieving the lowest possible tax rate, as they will ultimately need to meet the 15% standard through additional taxes.

Effective tax management today isn’t about minimising tax rates but managing them to ensure the 15% rate is the final figure. Companies must ensure their tax practices in every country in which they operate are accurate and comply with the rules.

To achieve tax compliance, companies must improve internal systems, review methodology and develop tax governance and maintain thorough documentation to reduce future tax challenges.

Piyanat
Finally, can you offer some key takeaways for taxpayers who must conduct business amid constantly changing legal and tax measures, as is the case today?

Niphan
Lately, there have been many changes in taxes, especially those related to international taxation. Many business operators are facing increasing costs from tax management and Thailand isn’t the only country implementing these rules. We’re also trying to be a good global citizen by adhering to global changes.

Therefore, with rising costs, I encourage businesses and taxpayers to view this as a period of tax transition. Our responsibility is to ensure that what we pay is indeed the final amount. We must avoid mistakes and strive for accuracy from day one to prevent and avoid future penalties, which would further increase our business costs.

Today, I urge everyone to reconsider how prepared and confident you are that your tax and back-office systems are accurate. If you feel they’re not 100% correct, it might be time to start discussions with your accounting, legal and tax teams to determine how long it will take to reach full compliance from your current position and what steps you need to take.

You should develop a plan to improve your processes and build back-office systems with the goal of good management and governance. This will lead to sustainable and beneficial tax management for all parties involved.

Piyanat
From today’s conversation, our listeners can see that taxpayers in Thailand are facing legal and tax challenges across multiple dimensions. Therefore, it’s important to stay updated on the legal and tax developments. This will help businesses and taxpayers to plan their taxes comprehensively and align with their business strategies. As Niphan concluded, it’s crucial for businesses to have a good tax management system, which includes focusing on tax compliance and a solid back-office system. These elements will help businesses manage taxes sustainably.

Thank you Niphan for joining us today to share important information on tax laws in Thailand.

Niphan
It’s my pleasure. Goodbye.

Piyanat
For more information, please visit our website at www.pwc.com/th or follow PwC Thailand social media channels – LinkedIn, X and Facebook for our latest updates.

Don’t forget to like and follow the PwC Thailand Spotlight podcast series so you don’t miss out on our new episodes.

That’s it for today, thank you and goodbye.