Thailand Enters a New Tax Era as MLI Comes into Force 

June, 2022 - Ramandeep Singh Bhamra

On March 31 of this year, Thailand submitted to the Organization for Economic Cooperation and Development (“OECD“) its notification of ratification of the Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (Convention or MLI). 

This Convention will take effect from July 1, 2022, and will have far-reaching and potentially substantial implications for Multinational Enterprises (“MNEs“) concerning inbound and outbound investments with Thailand.

The Multilateral Instrument (“MLI“) will implement Thailand’s tax treaty-related measures as part of its commitments under the OECD BEPS project. These include the minimum standards of Action Item 6 on the Prevention of Treaty Abuse and Action Item 14 on Mutual Agreement Procedures (“MAP“), and Action 7 on the Artificial Avoidance of a Permanent Establishment. 

The function of the Convention is to efficiently modify existing bilateral Double Taxation Agreements (“DTAs“) that Thailand has with other countries that also signed and ratified the Convention. The MLI avoids the need for Thailand to renegotiate its tax treaties separately.

The tax treaty modifications implemented through the MLI will amend various articles of Thailand’s tax treaties to limit tax treaty shopping and perceived abuses of these agreements.

These modifications will have the following implications for MNEs:

  • Stricter rules regarding the definition of Permanent Establishment;
  • Implementation of a Principal Purpose Test which will permit tax authorities to deny tax treaty benefits in certain cases; and
  • Modification of the tax dispute resolution processes under Mutual Agreement Procedures (MAP).

While the MLI will enter into force from July 1, most provisions and modifications will not take effect until January 1, 2023. This provides the Thai government time to make any modifications to Thai domestic tax rules needed to effectuate and implement any relevant provisions.

How DFDL can help:

DFDL is closely tracking these developments and has tax professionals positioned to help companies assess the risks of the numerous changes resulting from implementing the MLI.

In addition, DFDL professionals stand ready to guide on the operational and structural adjustments companies may need to undertake to avoid any adverse tax impacts from these new developments.


The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.



Jack Sheehan
Partner, Head of Regional Tax Practice
[email protected]

Jonathan Blaine
Thailand Tax Director
[email protected]


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