The Finance Ministry has completed drafting the financial hub legislation and expects to submit it to the cabinet in early February.
Deputy Finance Minister Paopoom Rojanasakul said the legislation provides greater privileges and authority than the Eastern Economic Corridor laws.
"The government intends to push forward this draft law," said Mr Paopoom. "After receiving cabinet approval, the draft will be forwarded for parliamentary approval on the first reading by the end of March this year."
The draft law, comprising 96 sections, establishes a One Stop Authority (OSA) committee with powers ranging from issuing and revoking licences to granting both tax and non-tax incentives for businesses investing in setting up a financial hub in Thailand.
The law waives the application of seven existing laws related to finance and insurance, including financial institution business laws, payment system laws, securities laws, and futures trading laws.
He said tax incentives, including corporate and personal income tax benefits, along with non-tax benefits to be granted by the OSA, will be outlined in subordinate legislation. These incentives are designed to attract investors more effectively than other global financial hubs.
Non-tax benefits will include special privileges related to visas, immigration, and regulatory reforms to improve the ease of doing business, said Mr Paopoom.
He said financial hubs elsewhere, such as Hong Kong, Singapore or Dubai, have certain limitations that the ministry has worked to eliminate.
Mr Paopoom said the main advantage Thailand has in becoming a financial hub is the country has a strong and comprehensive financial landscape, which covers everyone from the wealthiest to the poorest.
Thailand also has a credit guarantee system and plans to elevate it to the National Credit Guarantee Agency, a new facility for small and medium-sized enterprises that provides direct guarantees for a low fee.
In addition, the nation has relatively low labour costs, he said.
Moreover, Mr Paopoom said Thailand as a financial hub could connect Cambodia, Laos, Myanmar and Vietnam, as Hong Kong's financial centre is interested in partnering with Thailand's financial hub to gain easier access to this market.
Conversely, Thailand could gain better access to the Hong Kong market, he said.
"Under this law, Thai businesses such as financial institutions will be allowed to apply for licences on equal terms with foreign entities. The conditions are the same -- providing services to non-residents -- with exceptions for certain transactions for domestic entities, such as reinsurance for insurance companies in Thailand, or providing services to domestic securities companies for investing abroad," said Mr Paopoom.
He said the financial hub aims to attract Thai-incorporated entities and branches of foreign entities in eight sectors: commercial banking, payment services, securities business, futures trading business, digital asset business, insurance, reinsurance brokerage, financial or other related businesses as specified by the OSA.
Investments must be located in designated zones and must employ a certain proportion of Thai workers as specified.
Services can only be provided to non-resident individuals. However, services may be provided to residents in the following cases: (1) reinsurance can be arranged with Thai insurance companies to transfer the risk; (2) in the capital markets, services can be provided in cooperation with Thai operators (co-services) to assist clients in investing abroad; (3) interbank transactions can be conducted with Thai financial institutions to manage risks; (4) for payment services, systems can be connected with service providers under Thai regulations and; (5) for foreign exchange transactions, the operator must be a non-resident engaged in financial business and must comply with foreign exchange control laws and measures to prevent speculation on the baht.
Target businesses in the financial hub receive tax and non-tax benefits determined by the OSA. Tax benefits must be competitive, while non-tax benefits include exemptions from foreign business laws, benefits related to the immigration of foreign nationals to Thailand, and the right to own condo units for business and residential purposes.
A dedicated OSA office is to be established as a government agency to provide comprehensive public services to promote Thailand as a financial hub and attract financial businesses to invest.
The OSA committee is chaired by the finance minister and is responsible for setting policies and promotion strategies, determining the types and scope of licences, setting criteria, procedures and conditions for applications, as well as granting and revoking licences and overseeing operations.
All activities must comply with international standards for anti-money laundering and combatting terrorism financing.