On 16 Nov 2020, Thailand Transfer Pricing Ministerial Regulation No. 369 was gazetted, prescribing the regulations for Transfer Pricing Adjustments by the Thailand Revenue Department tax audit officers.

As enacted into the TP laws on 21 Nov 2018, and applying from 01 Jan 2019:

• In the case a related company that has commercial or financial dealings, which are different to those of companies operating independently and believed to be for the purpose of transferring profits, audit officers have power to adjust the income or the expenses of the company to amounts comparable to companies operating independently for the payments of income tax and withholding tax.

For the purposes of the tax audit officers exercising their power under this law:

• Ministerial Regulation No. 369 prescribes the regulations for the tax audit officers- see below; and
• The Director-General's Notification (No. 400) prescribes the Revenue Dept rules, procedures and conditions- see the Transfer Pricing Adjustment Rules.

The Regulations

Related party transactions

The tax audit officers are required to establish:

1. The related company has related party commercial or financial dealings,

2. The related party commercial or financial dealings are different to those of companies operating independently, and

3. The related party commercial or financial dealings result in a transfer of profit between the related companies in one of the following ways:

• By setting prices, conditions or methods of payment for sales of goods or services different to those of companies operating independently; or
• By receiving or paying interest or financial fee charges different to those companies operating independently; or
• By receiving other income or paying other expenses different to those of companies operating independently of each other.

Transfer pricing adjustments

When determining transfer pricing adjustments:

1. For a related company with commercial or financial dealings different to those of companies operating independently of each other, the tax audit officers are required to determine transfer pricing adjustments based on companies operating independently, and
2. For a related company with commercial or financial dealings different to those of companies operating independently of each other but for which there is no information of commercial or financial dealings of companies operating independently of each other under 1, the tax audit officers are required to determine transfer pricing adjustments based on similar-to commercial or financial dealings of companies operating independently whether in or out of the country, and whether of companies established under Thai laws or foreign laws.

Use of transfer pricing adjustments

Tax audit officer adjustments that are determined in accordance with the above shall be used:

1. For re-computing a related company's net profit for corporate income tax under Section 65 of the Revenue Code; and/or
2. For re-computing a related company's amounts for paying withholding tax under Sections 70 or 70 bis of the Revenue Code.

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