Thailand Transfer Pricing Proposed New Tax Laws
On 19 June 2017, the Thailand Revenue Department published a draft of the proposed new Transfer Pricing provisions to be inserted into the Revenue Code. This Tax Insight has been updated to reflect the Revenue Department's published draft of the new laws.
Draft Revenue Code Amendment Act for new Transfer Pricing Laws
On 7 May 2015, the Thailand Government approved a draft Revenue Code Amendment Act for adding new Transfer Pricing provisions into the Revenue Code.
The draft Revenue Code Amendment Act adds new laws that define related companies or partnerships, provide the Revenue officers with the power to adjust revenues and expenses, provide related companies or partnerships with a right to claim refund of tax for adjustments that cause a double taxation burden, and require related companies or partnerships to file reports, documents and evidence about their related party transactions, as follows:
Section 35 ter
Whoever fails to file reports, documents or evidence as required under Section 71 ter or files such reports, documents or evidence inaccurately without justifiable reason shall be subject to a fine not exceeding 200,000 Baht.
Section 71 bis, paragraph 1
When an assessment officer examines and finds that related companies or partnerships have commercial or financial arrangements that differ from arrangements that would have been agreed between companies or partnerships operating independently, the assessment officer has the right to adjust income and expenses for the purpose of corporate income tax computation to arrive at the income and expenses if the related companies or partnerships had operated independently according to international standards, treaties entered into by the Thai government with foreign governments for the avoidance of double taxation, and according to rules, procedures and conditions prescribed in a Ministerial Regulation.
Section 71 bis, paragraph 2
The term “related companies or partnerships” is defined as:
Section 71 bis, paragraph 3
The period of time within which a request for refund of tax shall be filed for cases when an assessment officer has adjusted income or expenses of related companies or partnerships under Section 71 bis, paragraph 1, shall be within 3 years from the prescribed due date for filing the tax return or within 60 days from the date of receipt of a written notice of adjustment of income or expenses by the assessment officer.
Section 71 ter, paragraph 1
Related companies or partnerships with revenues in excess of the amount prescribed in a Ministerial Regulation shall prepare reports providing information on their related company or partnership transactions and their total transaction values for each fiscal year according to the form prescribed by the Director-General of Revenue, and shall file such reports to the assessment officers with their tax returns within the time period prescribed in Section 69.
Section 71 ter, paragraph 2
The assessment officers, with approval from the Director-General of Revenue, may notify related companies or partnerships with revenues in excess of the amount prescribed in a Ministerial Regulation to provide documents or evidence as considered necessary for an analysis of the related company or partnership transactions according to a Notification of the Director-General of Revenue, which related companies or partnerships shall provide within 60 days from the date of receipt of the notification except for special circumstances when companies or partnerships cannot provide such documents or evidence within that time period for which the Director-General of Revenue may extend the time period but not longer than 120 days from the date of receipt of the notification.
This Tax Insight is general information only. It should not be used to determine any particular matter without consulting with an experienced Thailand tax advisor.