Thailand lifts minimum wages, proposes tax relief for employers

February 9, 2018

BANGKOK – The Thai Cabinet has approved new nationwide minimum wages as proposed by the Ministry of Labour effective from April l. The minimum daily wage rates increase between 2% and7% to a range of Baht 308 to Baht 330 varying from province to province.

In determining the new minimum wage rates for each province, consideration was given to provincial economic indicators, such as GDP, labour demand in each province and wages in neighbouring countries.

However, in a Client Alert, lawyers Baker McKenzie comment that it is interesting to note the minimum wage rate in Rayong is surprisingly higher than the rate in Bangkok, despite Bangkok's higher cost of living. 

BM says that, in addition to the new minimum wage rates, certain relief measures have been introduced to alleviate the pressure that some employers may face.

 According to a Royal Decree, where it is a legal entity, an employer will be exempted from corporate income tax equivalent to 15% of minimum daily wage expenses, excluding overtime payment, allowances and any tax paid by an employer on behalf of employees.

To be eligible for the tax exemption, the employer must satisfy the following conditions:


The employer must have revenue from the sales of goods or services during the fiscal year of not more than Baht 100 million, and must have fewer than 200 employees;


Minimum daily wages paid to employees from April 1 2018 to December 31 2018 must be higher than the wages paid to the employees before April 1 2018; and


The employer must not already be entitled to any other tax benefits for its wage expenses.

The Client Alert says there are other future measures in the pipeline that the Government is proposing to helpSMEs and industry operators cope with the new wage rates.


One measure proposed by the Ministry of Industry involves allocating Baht 5 billion to increase the productivity of SMEs to help them reduce costs and enhance the potential of entrepreneurs and personnel over the next three years.


The Board of Investment is suggesting two approaches.


Firstly, there would be a maximum 50% corporate income tax reduction for three years for entrepreneurs that have modernised their machinery and applied digital and internet-based services to their production and management of their business.


Secondly, SMEs that have human resources-related expenses, such as improving technology skills budgets, will be entitled to a reduction from taxable income of 200% on the expenses incurred. BM notes that these proposals have not yet been approved and may be subject to further changes.

Additional future proposals include a requirement that an employer having 50 or more employees must prepare a wage structure for employees to see as reference and as a guarantee that the wages will be increased every year.


Another is the application of floating wage rates in provinces located in Eastern Economic Corridor (EEC) such as Rayong, Chonburi and Chachoengsao in order to ensure that skilled workers are available in those locations to serve the needs of employers in the EEC. Similarly, this proposal has not yet been approved. (ATI).