Due to Thailand’s participation in the Global Forum on Transparency and Exchange of Information for Tax Purposes and the Inclusive Framework on BEPS, the Ministry of Finance has decided to terminate all tax privileges granted to the so-called “International Headquarters” (IHQ), “Regional Operating Headquarters” (ROH) and “International Trading Center” (ITC), which are viewed as harmful tax practices due to their ringfencing natures, within the year 2019.

On 2 May 2019, the Revenue Department also issued Announcement of the Director General (No. 13) concerning rules, methods and conditions for tax rate reduction and exemption for the so-called “International Business Center” or “IBC”, which grants certain tax privileges to the IBC’s onshore and offshore incomes equally.

To lessen damages that may be sustained by the IHQ/ROH from the abrupt termination of the IHQ/ROH tax privileges, the Announcement allows the IHQ/ROH to be converted to the IBC by submitting a simple application form without the need to do business plan. Although the tax privileges granted to the IBC for the offshore incomes may not be as good, the law still provides attractive tax rates reduction and exemption to both the IBC and its expatriates. This benefit is, however, not extended to the ITC.

By Prof. Piphob Veraphong and Rachanee Prasongprasit