Who Will Be Affected by the Top-up Tax Law?
Constituent entities (“CE”) that are members of a multinational enterprise (“MNE”) group with annual revenues of EUR 750 million or more in the consolidated financial statements of the Ultimate Parent Entity (UPE) in at least two of the last four fiscal years immediately preceding the tested fiscal year.
Obligations under the Top-up Tax Law?
Submit Notification Form
You must notify the detailed name of the UPE entity and the designated CE responsible for filing the GloBE Information Return.
File GloBE Information Return (GIR)
Thai CEs will not be required to file a GIR with the TRD if the return has already been filed by either the UPE or a designated filing entity located in a jurisdiction with a qualifying competent authority agreement with Thailand for the reporting fiscal year.
File Top-up Tax Return
CEs under MNEs who have a liability to pay Top-up Tax (QDMTT, IIR, UTPR) are eligible for instalment payments within three years. Additionally, they can request a refund by submitting an application within three years if they have paid excess Top-up tax.
You must submit the filings with the TRD within 15 months after the last day of the UPE's fiscal year. For the first fiscal year in which the MNE group is subject to the Top-up Tax under this decree, there is a three-month extension to 18 months.
Mechanism of tax collection under the Top-up Tax Law?
Foreign Top-up Tax
Income Inclusion Rule (IIR): Requires MNEs to pay a Top-up tax in jurisdictions where the Effective Tax Rate is below 15%. (Primary rule)
Undertaxed Profits Rule (UTPR): Collects Top-up tax if the IIR does not result in sufficient tax being paid. (Secondary rule)
Domestic Top-up Tax
Qualified Domestic Minimum Top-up Tax (QDMTT): This allows countries to implement their own minimum tax to ensure that income is taxed at the minimum rate domestically before any Top-up tax is applied.
Sanctions Under the Top-up Tax Law
Failure to file the GloBE Information Return and pay the Top-up Tax by the deadline in full may result in additional penalties (100% or 200% of the Top-up Tax shortfall, depending on the case), a 1.5% monthly surcharge (capped at the Top-up Tax shortfall amount), and criminal sanctions, including fines and imprisonment.
Authority of Assessment official
Several aspects of the Top-up Tax Law remain unclear, such as the submission system, required forms, and the Top-up Tax return format. We anticipate the Revenue Department will provide further details through secondary legislation soon. Stay tuned!
For complete detailed and eligibility criteria, please refer to Emergency Decree on Top-up Tax, B.E. 2567 (2024)
