Thailand : Transfer Pricing
| 1. Overview of Transfer Pricing Regulations in Thailand | Transfer pricing in Thailand is governed by 1. Thai Revenue Code 2. Ministerial Regulation No. 369 (B.E. 2563) (2020) Issued under the Thai Revenue Code Regarding the Adjustment of Income and Expenses of Related Companies or Partnership 3. Ministerial Regulation No. 370 (B.E. 2563) (2020) Issued under the Thai Revenue Code Regarding the Revenue Threshold of Companies or Juristic Partnerships According to Section 71 ter paragraph 3 | |
| 2. Whether aligned with BEPS? | Yes, Thailand participates the Inclusive Framework on BEPS. | |
| 3. Scope and Applicability of Transfer Pricing Regulations | Company or Jursitic Partnership (for juristic partnership, it includes limited partnership and registered ordinary partnership) | |
| 1. who proceeds a transaction with its related companies or juristic partnerships under Transfer Pricing Regulations (please see below the definition as specified in Item 5.); and 2. Such company or juristic partnership has revenue of more than 200 million THB; and 3. Subjects to disclose information regarding its related companies or juristic partnerships and their transactions by submitting a Disclosure Form to the Thai Revenue Department | ||
| 4. Transactions Covered: | Commercial or financial terms, agreements, or contracts involving sales, services, marketing, advertising, loans, financial assistance, or other commercial or finance transactions, both verbally and in writing. | |
| 5. Legal Definition of Related companies or juristic partnerships Under Transfer Pricing Regulations | Two entities or more are considered as related companies or juristic partnerships if any of the following conditions are met: | |
| 1. An entity, either directly or indirectly, holds shares or partnership (contribution) with not less than 50% of the total shares or partnership (contribution) of another entity; or 2. A shareholder or partner of an entity holds shares or partnership (contribution) at 50% or more of its total shares or partnership (contribution) and such shareholder or partner holds shares or partnership (contribution) at 50% or more of the total shares or partnership (contribution) in another entity; or 3. An entity that has a capital, management, or control relationship with another entity and either of them cannot operate independently. | ||
| 6. Recognized Transfer Pricing Methods | Thailand applies six methods: | |
| 1. Comparable Uncontrolled Price Method | ||
| 2. Resale Price Method | ||
| 3. Cost Plus Method | ||
| 4. Transactional Net Margin Method | ||
| 5. Transactional Profit Split Method | ||
| 6. Other Methods subject to notification to the Director General of the Thai Revenue Department | ||
| 7. Data Used for comparison to improve the company or juristic partnership’s incomes and expenses. | The tax assessor will use these data to assess the company or juristic partnership’s incomes and expenses; | |
| Internal Data 1. Prioritize using internal data from transactions that occurred between the related companies or juristic partnerships with other third-party companies or juristic partnerships External Data 2. If internal data is unavailable, external data from transactions of other third-party companies or juristic partnerships shall be used, regardless of whether the transactions are conducted in Thailand or outside and by incorporated entities under Thai or foreign laws | ||
| 8. Transfer Pricing Audit Process and Penalties | Transfer Pricing Audit Process | |
| Documentation Review – Disclosure Form (Master Files) and Local Files which were requested by the tax assessor to be used for analysis. 1. Contractual Term of the Transaction 2. Functional Analysis : FAR 3. Characteristic of Property & Service 4. Economic Circumstances 5. Business Strategy Remarks: – Local Files refer to the documents or evidence used to analyze the contractual terms of the transactions – All documentations must be submitted in Thai language | ||
| The Tax Assessor Examination – The tax assessor verifies Arm’s Length Price (ALP). | ||
| Adjustments – If pricing is incorrect, taxable income is adjusted. | ||
| Penalties for Non-Compliance | ||
| Violation | Penalty | |
| Failure to file a Disclosure Form, providing a false declaration, or providing insufficient information | A fine not more than 200,000 THB | |
| 9. Reporting Deadlines and Compliance Timelines | 1. Disclosure Form: Within 150 days from the last day of the fiscal year by electronic filling or by hand-in submission 2. Local Files: The Revenue Department can request local files within 5 years from the Disclosure Form filing date, and the Local Files must be submitted within 180 days of receiving the first notification or 60 days of receiving subsequent notifications by the Thai Revenue Department | |