It's currently harcoded like this:

terminal-window.c:

static void
update_tab_visibility (TerminalWindow *window,
                       int             change)
{
  TerminalWindowPrivate *priv = window->priv;
  gboolean show_tabs;
  guint num;

  num = gtk_notebook_get_n_pages (GTK_NOTEBOOK (priv->notebook));

  show_tabs = (num + change) > 1;
  gtk_notebook_set_show_tabs (GTK_NOTEBOOK (priv->notebook), show_tabs);
}


so whenever there's more than 1 tab the visibility is always true. It would be nice to have this configurable so user can disable this.