In 2022, Thailand amended its Civil and Commercial Code (CCC) to introduce mergers by absorption under Section 1238(2), effective from 7 February 2023. Under this procedure, two companies merge, with one surviving and the other ceasing to exist by operation of law, without separate dissolution and liquidation proceedings.
However, the relevant tax rules were not updated to expressly address this form of merger. In accordance with the prevailing framework, companies transferring their entire business to another company may qualify for certain tax exemptions, subject to specific conditions, including the dissolution and liquidation of the transferring company.
In Ruling No. 0702(GorMor.)/453 dated 11 April 2025, the Thai Revenue Department (TRD) confirmed that mergers by absorption under Section 1238(2) of the CCC could be treated as entire-business transfers (EBTs) for tax purposes, with Section 74(1)(c) of the Revenue Code applying by analogy. However, the ruling continued to apply the existing dissolution and liquidation requirement, without clarifying how it could be satisfied when the absorbed company ceases to exist by operation of law.
On 22 April 2026, the TRD issued supplementary Ruling No. 0702(GorMor.)/462 to resolve this inconsistency and clarify the related tax obligations.
The TRD confirmed that registration of a merger by absorption within the relevant accounting period fulfils the dissolution and liquidation requirement under the Director-General's Notification of 19 October 2012. This allows the merger to qualify for the relevant EBT tax benefits without separate dissolution and liquidation proceedings.
Provided the relevant conditions are met, the following tax benefits may be available: corporate income tax relief on gains arising from the exchange of shares, exemptions from Specific Business Tax on qualifying real estate transfers, and Stamp Duty exemptions. For Value Added Tax (VAT) purposes, a qualifying transfer of an entire business is not treated as a sale, provided that the receiving company is subject to VAT under Section 82/3 of the Revenue Code.
The merger registration date also serves as the reference date for certain EBT tax exemption conditions, including the 30-day deadline for submitting the required information on shareholders and shareholdings to the TRD and the verification of outstanding tax liabilities.
For corporate income tax purposes, the merger registration date marks the end of the final accounting period of the absorbed company. The surviving company is responsible for filing the absorbed company's final corporate income tax return and paying any tax due.
Any reserves or retained profits of the absorbed company that have not previously been subject to corporate income tax must be included in its taxable income for the final accounting period.
The following existing corporate income tax principles continue to apply:
Asset valuation: The assets of the absorbed company are valued at market value on the merger registration date, without the revaluation giving rise to taxable income or deductible expenses. The surviving company retains their existing tax book values.
Depreciation: The surviving company continues depreciation using the remaining tax basis and depreciation period of the transferred assets, in accordance with the previously applicable depreciation rates and rules.
Tax losses: The tax losses of the absorbed company cannot be carried forward to the surviving company.
The ruling therefore clarifies the application of the existing EBT tax framework to mergers by absorption, while leaving the other eligibility conditions unchanged.
