Transfer Pricing - Thailand

The transfer pricing regulations can be found in the Thai Transfer Pricing Guidelines and the Supplementary Clarification on Determination of Market Price for Multinational Enterprises. The Thai Transfer Pricing Guidelines do not have any legal status. Rather, they provide internal instructions from the Director-General of Revenue to the Revenue officers with regard to transfer pricing matters. Nevertheless, these Guidelines reflect the Revenue Department’s interpretation of tax law, so that non-compliance by a taxpayer is likely to lead to a tax dispute. As a result, taxpayers are expected to prepare and maintain transfer pricing documentation and supporting documents at their office, ready for inspection if and when requested.

 

The Thai Transfer Pricing Guidelines basically confirm the applicability of the general provisions of corporate income tax law to transfer pricing issues. One notable change was the introduction of the application of the concept of functions, risks and assets in assessing a taxpayer’s transfer pricing compliance. The Thai Transfer Pricing Guidelines also specify which transfer pricing methods are acceptable and what kind of information and documents the Revenue officers should request from a taxpayer when reviewing its transfer pricing practices. Furthermore, the Guidelines communicate to taxpayers that they may apply for an advance pricing agreement (APA) with the Revenue Department.

 

On 21 November 2018, Thailand passed specific transfer pricing provisions into law to modernize the outdated law and to

make transfer pricing disclosure mandatory. Therefore, the above-mentioned scope of legislation is still applicable.

 

Scope of Legislations

The tax provisions and the Thai Transfer Pricing Guidelines are also applicable to domestic transactions, as well to cross border transactions.

  • The Transfer Pricing Law of 21 November 2018 introduced a requirement to submit an annual TP disclosure form. On 7 November 2019, the Revenue Department issued the Notification of the Director-General of Revenue Department defining the content of the TP disclosure form. The TP disclosure form was published on 18 November 2019. On 15 March 2020, the Revenue Department issued guidance on the TP disclosure form. On 14 January 2021, the Director-General of Revenue issued a notification to make online filing of the TP disclosure form mandatory for accounting periods beginning on or after 1 January 2020. The taxpayer had the choice of paper or online filing for accounting periods beginning on or after 1 January 2019.

  • The Transfer Pricing Law of 21 November 2018 introduced a requirement to submit a Local File. The official language in Thailand is Thai. Documents to be submitted by the taxpayer to the Revenue Department should, strictly speaking, be in Thai. However, in practice, taxpayers may prepare and submit their transfer pricing documentation in English. The Revenue officer may nevertheless request that the taxpayer translate part or all of its transfer pricing documentation into Thai.

    The Local File requirement applies to taxpayers with an annual revenue of more than THB 200 million. The Local File is effective for accounting periods beginning on or after 1 January 2019. The Local File must be filed within 60 days upon request by Revenue officers, except for the first request whereby the time is extended to 180 days.

    The maximum penalty is THB 200,000 in case of failure to disclose or disclosure of incomplete or incorrect transfer pricing information on the Local File.

  • Not Applicable

  • In June 2017, Thailand joined the Base Erosion and Profit Shifting Inclusive Framework (BEPS IF) which allows interested countries and jurisdictions to work with OECD and G20 members on developing standards on BEPS-related issues and reviewing and monitoring the implementation of the whole BEPS package.

    Thailand was first reviewed under the phase-1 peer review process, wherein three recommendations were made. The phase I peer review report recommended

    • that Thailand finalize its domestic legal and administrative framework in relation to CbC requirements as soon as possible, taking into account its particular domestic legislative process;

     

    • that Thailand take steps to put in place an exchange of information framework that allows automatic exchange of information and have Qualifying Competent Authority Agreements in effect with jurisdictions of the Inclusive Framework which meet the confidentiality, consistency and appropriate use prerequisites; and

     

    • that Thailand take steps to ensure that the appropriate use condition is met ahead of the first exchanges of CbC reports. According to the second and third peer review reports, Thailand has not implemented measures to address these issues since the 2017/2018 peer review and, as such, the recommendations have remained unchanged.

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For further information on transfer pricing in Thailand please contact:

Gyan Prakash Srivastava [MBA, LL.B.]

Leader - South Asia Practice
17+ years experience in Global Transfer Pricing Documentation, Litigation, BEPS compliance & advisory. During his tenure with PwC & Deloitte he has worked for marquee clients. Gyan specializes in assisting clients in developing cross border business models based on on-ground commercial facts and legal issues.

Priyanka Sondhi [FCA]

Leader - Global Databases & Benchmarking

15+ years, experience in Global Databases and Benchmarking, Transfer Pricing Documentation & Compliance, Valuation, Policy, Research and Analysis.
Worked with Deloitte Global Transfer Pricing Team. Enriched experience in Deloitte wherein was responsible for TP Compliance & Database Management, Valuation Support, Research and Advisory services for clients from varied industries.

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