Global Tax Alert | 16 October 2018

Thailand introduces International Business Center regime to replace existing incentive regimes

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Executive summary

On 9 October 2018, the Thai Cabinet approved the repeal of the existing tax-incentivized regional and international headquarters regimes by replacing them with a single International Business Center (IBC) regime. Under the IBC, new conditions must be met to be eligible for the incentives and certain existing incentives would be reduced.

This measure is in response to the Harmful Tax Practices – 2017 Progress Report on Preferential Regimes (Inclusive Framework on Base Erosion and Profit Shifting (BEPS): Action 5) in which Thailand’s regional/international headquarters, trading and treasury hub regimes were identified as harmful tax practices.

Detailed discussion

Repealed regimes

The following regimes are repealed:

  • Regional Operating Headquarters (ROH) I and ROH II under Royal Decrees 405 & 508
  • International Headquarters (IHQ) and Treasury Center (TC) under Royal Decree 586
  • International Trading Center (ITC) under Royal Decree 587

Entities under the existing ROH II, IHQ, TC and/or ITC regimes

Entities which have already been granted incentives under ROH II, IHQ, TC and/or ITC regimes remain eligible for these tax incentives under the existing conditions until their current status expires (for an IHQ/ITC, this may be for up to 15 years). Entities with ROH I status, however, can only enjoy the incentives until the end of the accounting year 2020. The existing ROH or IHQ/TC entities may choose to convert their status into an IBC.

No new applications for the existing regimes will be accepted and approved on or after 10 October 2018.

Comparative chart

Main tax incentives and conditions

Corporate income tax

  • Qualifying service, TC and royalty incomes
  • 0% (overseas)/10% (local)
  • 8%, 5% or 3%1
  • Dividend income from local and overseas
  • Exempt (only dividends from overseas)
  • Exempt
  • Capital gains
  • Exempt
  • Not mentioned
  • Trading income
  • Exempt
  • Not mentioned

Withholding tax

  • Dividend distribution to overseas
  • Exempt
  • Exempt
  • Interest payment to overseas
  • Exempt
  • Exempt

Specific business tax

  • Qualifying TC income
  • Exempt
  • Exempt

Personal income tax

  • Qualifying expatriates
  • 15%
  • 15%

Minimum paid-up capital

THB10 million (US$0.31 million)

THB10 million

Minimum annual local spending

THB15 million (US$0.46 million)

THB60 million (US$1.85 million)2

Minimum number of employees


10 persons (5 persons for TC)

Further details of tax incentives and conditions under the IBC regime are expected to be released shortly and remain subject to further legislative processes.


1. A qualifying IBC is entitled to reduced corporate income tax rates of 8%, 5% or 3%, provided it meets the minimum annual local spending requirements of THB60 million, THB300 million (US$9.23 million) or THB600 million (US$18.5 million), respectively.

2. Not applicable to an ROH or IHQ that converts to an IBC.

For additional information with respect to this Alert, please contact the following:

EY Corporate Services Limited, Bangkok
  • Kasem Kiatsayrikul
  • Pathira Lam-ubol
  • Su San Leong
Ernst & Young LLP, Thai Tax Desk, New York
  • Sarunya Sutiklang-viharn
Ernst & Young LLP, Asia Pacific Business Group, New York
  • Chris Finnerty
  • Kaz Parsch
  • Bee-Khun Yap

EYG no. 011426-18Gbl