The Cabinet met on Monday 27 July, brought forward a day because Tuesday was the public holiday for His Majesty the King's Birthday, and chaired by Prime Minister Anutin Charnvirakul. For businesses, the session did two things at once. It removed a familiar year-end uncertainty by extending the reduced 7 percent VAT rate, and it set direction for the next phase of Thailand's digital economy by adopting, in draft, a national Big Data and AI strategy. Around those sit an income-tax relief for the fishing fleet reduction programme and a decision to keep Orange Line construction funded. Read together, the data and AI strategy, the draft Thailand AI Act now in consultation, and the government's continuing courtship of Chinese data-centre and cloud investment describe where the policy energy is heading.
One rule governs everything below. A measure approved in principle is not yet law: each draft here takes legal effect only when it is published in the Royal Gazette, and no position should be booked or relied upon until then. Where an item is a Cabinet resolution that operates now, or merely a Prime Ministerial instruction to officials, we say so.
The dated deadlines that matter this fortnight
- Now in effect (since 28 July): the e-Work Permit system is the sole channel for initial work-permit applications, renewals, cancellations, and amendments. The manual-filing grace period has ended.
- 30 July: BOI-promoted companies must file the Q2 (April to June) progress report via e-Monitoring. A missed filing puts promotion privileges, including visa and work-permit processing, at risk.
- 31 July: the SEC public hearing on internal-auditor qualifications for IPO-track companies closes.
- 1 August: the DBD's bank-statement verification of Thai shareholders in high-risk, foreign-linked companies takes effect in 16 provinces, including Bangkok, Phuket, Chiang Mai, and Chonburi. Inconsistent filings will be rejected.
- On or about 1 August: the public consultation on the draft Thailand AI Act closes.
- 3 to 4 August: the Prime Minister's official visit to Indonesia, at which a Thailand-Indonesia Strategic Partnership Plan (endorsed by the Cabinet on 21 July) is expected to be signed.
These arise under rules already in force or previously announced, tracked by our Regulatory Watch. They are not decisions of the 27 July session, but they define the fortnight in which its decisions land.
Key Takeaways
- The reduced 7 percent VAT rate is set to run another year, from 1 October B.E. 2569 (2026) to 30 September B.E. 2570 (2027). It is approved in principle as a draft Royal Decree and continues under the existing decree until the new one is gazetted, so nothing on your invoices changes now.
- Compensation paid to fishing-boat owners under the government's vessel buy-back programme (923 vessels, budget THB 1.62 billion) is set to become exempt from personal and corporate income tax. Approved in principle; not claimable until gazetted.
- The Cabinet noted, in draft, a national Big Data strategy for B.E. 2568 to 2570 (2025 to 2027) built on data infrastructure, sector data use, AI adoption, and workforce training toward not fewer than 60,000 people by 2570. It is a planning framework, not law.
- The Cabinet approved an advance of about THB 9.41 billion from the Mass Rapid Transit Authority's own funds to keep Orange Line civil-works payments current and reduce dispute risk with the private co-investor. This one operates now.
- Separately, before the meeting the Prime Minister instructed the Labour and Commerce Ministries to strengthen labour-law enforcement and address industrial overcapacity in response to new US tariff pressure. This is an instruction to officials, not a rule that binds business.
1. Your VAT rate holds at 7 percent for another year, to 30 September 2027.
The Cabinet approved in principle a draft Royal Decree under the Revenue Code B.E. 2481 (1938) that extends the reduced rate of value added tax. Under section 80 of the Code the standard rate is 10 percent, but a long run of Royal Decrees has held the effective rate at 7 percent inclusive of local tax, or 6.3 percent before local tax. Twenty-three such decrees have issued since 1992, all but one setting the reduced 7 percent rate; the current one, Royal Decree (No. 646) B.E. 2560 (2017) as amended, expires on 30 September B.E. 2569 (2026). The new draft, the twenty-fourth, would carry 7 percent forward for a further year, to 30 September B.E. 2570 (2027).
For any business that issues tax invoices or bears input VAT, the value here is planning certainty: you can now budget FY2027 on a 7 percent rate rather than hedging a possible step up toward 10 percent. The Finance Ministry records that the extension causes no additional loss of state revenue beyond the existing reduction. Nothing about day-to-day compliance changes on the strength of this resolution, because the current decree still governs until the new one takes over.
Status: approved in principle. The extension binds only on Royal Gazette publication, which should occur before the current decree lapses on 30 September 2026. If the successor decree is not gazetted in time, a rate question arises at the changeover, so contracts and pricing that assume continuity should be confirmed against the gazetted text.
2. Fishing-boat buy-back compensation is set to become income-tax free.
The Cabinet approved in principle a draft Royal Decree under the Revenue Code exempting from income tax the compensation paid to boat owners under the programme to remove fishing vessels from the fishery for sustainable marine-resource management. The exemption reaches both individuals and juristic persons, so company-owned fleets as well as sole operators. The programme covers 923 vessels, with a compensation budget of THB 1,622,605,300 that the Department of Fisheries is paying in installments.
The purpose is to let owners keep the full compensation as capital for a new livelihood rather than surrender part of it to tax. The Finance Ministry estimates the relief will reduce tax revenue by about THB 167 million (THB 160 million in personal income tax and THB 7 million in corporate income tax), with a further withholding-tax refund of roughly THB 16 million. Read with the government's fisheries policy framework and the live aquatic-animal export protocols it has been advancing, the direction for the sector is consistent: fewer boats, tighter capacity control, and a managed exit for operators leaving the fishery.
Status: approved in principle. No payment is tax-exempt until the Royal Decree is gazetted.
3. The government has fixed its data and AI direction, and it points at your sector.
The Cabinet noted, in draft, a national strategic plan for the use of big data for B.E. 2568 to 2570 (2025 to 2027), prepared by the Big Data Institute, a public organisation. It rests on four pillars: national data infrastructure such as a government cloud and data catalogue; the use of data to address priority sectors including health, tourism, and the environment; the development and application of AI to raise the quality of government, business, and industrial services and to support Thai-language AI models; and workforce training, with a target of not fewer than 60,000 people trained in big-data and AI skills by 2570, up from 36,929 in 2568.
For the digital economy, and for the data-centre, cloud, and electronics investors the government has been courting, the plan matters less as rules than as a map of where public investment, procurement, and attention will flow. It sits beside the draft Thailand AI Act, whose consultation closes on or about 1 August, and the push for Chinese investment in data infrastructure. Together they mark out a government building data and AI capacity while a binding AI statute takes shape.
Status: noted, not adopted, and expressly a draft. It creates no obligation, licence condition, or penalty. Enforceable duties for the AI economy will come from the Thailand AI Act and its subordinate rules, not from this plan.
4. The state has moved to keep Orange Line construction funded.
The Cabinet approved a proposal to advance about THB 9.41 billion (THB 9,414,200,477.45) from the Mass Rapid Transit Authority's own funds to support the civil-works payment under the Orange Line concession contract for the Bang Khun Non to Cultural Centre section, for fiscal year B.E. 2569 (2026), under section 75(2) of the Mass Rapid Transit Authority of Thailand Act B.E. 2543 (2000) as amended. The Budget Bureau will consider a later allocation to reimburse the Authority. The reasoning is that the central emergency reserve is limited and the payment is time-sensitive, so advancing the Authority's own funds protects the state's position and reduces the risk of a dispute with the private co-investor.
For contractors, suppliers, and the concessionaire, the signal is that the government is prioritising continuity of construction and is willing to have the Authority advance its own funds to avoid a payment gap that could trigger a claim. It is an internal financing decision rather than a new procurement, but it tells the market that project cash flow is being managed and that dispute exposure on major PPP works is on the government's mind.
Status: a Cabinet resolution that operates now, as an administrative and budgetary decision. It changes the timing and source of payment; it does not alter the concession contract or create new tenders.
Action (H2 2026): treat Orange Line cash flow as stabilised, and keep payment and claims documentation current on any major PPP contract.
Also worth noting
What we are watching on US trade. Before the meeting, the Prime Minister addressed new US tariff pressure on trading partners and instructed the Labour and Commerce Ministries, with other agencies, to strengthen labour-law enforcement and to address industrial overcapacity, with the Commerce Ministry leading on the latter. This is a Prime Ministerial instruction reported through the deputy government spokesperson, not a Cabinet resolution, and it does not appear in the official summary. It matters because the United States pursues tariff action under Section 301 of the Trade Act of 1974, while forced-labour import enforcement runs separately under Section 307 of the Tariff Act of 1930 and related withhold-release orders. Exporters to the United States should keep labour-compliance and supply-chain records in order, and capacity-sensitive manufacturers should watch for Commerce Ministry measures; we will report any that issue.
Two further items carry business relevance. The Cabinet eased the eligibility screening for the State Welfare Card programme, and among the changes it confirmed that holding a directorship or shares in a registered social enterprise, or a registered community enterprise, no longer automatically disqualifies an applicant. Separately, it approved in principle a draft ministerial regulation under the Revenue Code exempting from personal income tax the lump-sum assistance and the Government Pension Fund benefits received by officials who leave under the Ministry of Defence early-retirement programme for B.E. 2568 to 2570, from the 2025 tax year, consistent with the Cabinet resolution of 9 July B.E. 2567 (2024) that established the scheme. Like the other draft measures, it awaits Royal Gazette publication.
On administration and diplomacy, the Cabinet noted the Marrakech Declaration on road safety and approved a reshuffle of senior officials in the Ministry of Agriculture and Cooperatives, including a new Director-General of the Royal Irrigation Department, several appointments subject to royal endorsement. The Prime Minister also directed agencies to prepare for his official visit to Indonesia on 3 to 4 August, a second outbound economic mission within a month that businesses with Indonesian exposure should watch.
Where we can help
Our Tax and Corporate and Commercial teams advise on VAT planning across the rate-extension changeover and on the income-tax relief for fishing-boat compensation, and on data and AI governance as the national strategy and the draft AI Act take shape. Our Immigration team keeps foreign-staff filings ahead of the e-Work Permit transition and BOI reporting deadlines. Our Litigation and Dispute Resolution team acts in construction, infrastructure, and PPP disputes, and advises US-facing exporters on labour-compliance and trade questions. To arrange a 30-minute strategy call, contact [email protected].
Disclaimer: This publication is intended for general informational purposes only and does not constitute legal advice. The information contained herein should not be relied upon as a substitute for specific legal counsel. For advice tailored to your circumstances, please contact Dej-Udom & Associates directly.