Thailand Transfer Pricing Market Value Guideline
On 16 May 2002, Thailand's Director-General of Revenue issued Departmental Instruction No. Paw 113/2545 (Paw 113) which provides guidelines to Revenue officers for when they have to consider transfer pricing "market values".
Transactions to which Paw 113 apply
Paw 113 applies to income transactions that are conducted without compensation or with compensation lower than market value without justifiable ground and expense transactions that are conducted at higher than market value compensation without justifiable ground.
Definition of market price
Paw 113 defines for the Revenue officers that "market value" is the value that independent contracting parties determine commercially and in good faith for sales of goods, provision of services or lending of money.
Acceptable pricing methods
The Paw 113 guideline instructs the Revenue officers to accept the following 4 methods for determining "market value":
Documentation requirements under tax audit investigations
For Revenue officers conducting tax audit investigations of market values for the purposes of computing corporate income tax by companies in a group, the guideline lists a set of 10 company-prepared and kept documents, which the Director-General instructs his Revenue officers to take into account. The list of 10 documents is as follows:
Advance pricing agreements
Finally, the Paw 113 guideline instructs Revenue officers to permit companies to enter into advanced pricing agreements with the Revenue Department, and companies wishing to do this are permitted to file an application to the Revenue officers with the relevant documents concerning the issue.
This is a general information Tax Insight Article only. It should not be used to determine any particular matter without consulting with an experienced Thailand tax advisor.