Common Misconceptions About OECD Pillar Two Minimum Tax Rules for Multinational Enterprises in Thailand

Key summary

Many multinational enterprises (MNEs) operating in Thailand mistakenly believe that a statutory Corporate Income Tax (CIT) rate of 15% or higher automatically exempts them from the OECD's Pillar Two rules. However, Forvis Mazars Thailand experts Mr. Parin Sapsaisawol and Mr. Peer Jenkarnsuk clarify that this is not universally true. The Global Anti-Base Erosion (GloBE) Rules calculate an Effective Tax Rate (ETR) based on Adjusted Covered Tax (ACT), which includes deferred tax, timing differences, and exempt income, potentially lowering the ETR below 15% even if the statutory rate is higher.

Pillar Two applies only to MNEs with consolidated revenue of at least EUR 750 million over a two-year period out of the last four years. Key misconceptions addressed include:

1. **Statutory Tax Rate vs. ETR:** A high CIT rate does not guarantee exemption; the ACT calculation is complex and must consider deferred tax, which is often required under Pillar Two even if not recorded under Thai Financial Reporting Standards (TFRS) for non-publicly traded entities.

2. **Scope of Application:** The rules apply based on consolidated group revenue, regardless of whether the head office is in Thailand or abroad. Local subsidiaries must prepare financial data and deferred tax calculations to support the group's compliance.

3. **Safe Harbour Measures:** The Transitional CbCR Safe Harbour reduces reporting burdens but is temporary, applicable only for fiscal years starting on or before December 31, 2027. Passing this safe harbour does not confirm that the full GloBE ETR will remain above 15%.

4. **ETR Differences:** Simplified ETR (used for Safe Harbour) differs from GloBE ETR due to additional adjustments like deferred tax.

Forvis Mazars advises MNEs to prepare early, identify in-scope entities, and manage deferred tax calculations to avoid unexpected tax liabilities. The firm offers specialized support globally and locally for the remainder of 2026.