Transfer Pricing Update

By joining the Inclusive Framework on Base Erosion and Profit Shifting on 2 June 2017, Thailand committed itself to the implementation of the BEPS minimum standards.

As a consequence, the Act Amending the Revenue Code on Transfer Pricing (“TP”) was announced on 18 November 2018 and came into effect on 1 January 2019, requiring any company with annual revenue of over THB 200 million (~ USD 6.5 million) to submit a TP disclosure form together with its annual tax return and to prepare the underlying TP documentation.

The usual due date is within 5 months after the fiscal year end (i.e. normally 31 May, unless the company uses a deviating Fiscal Year (“FY”)), but the deadline for the 2019 tax return has been extended until 31 August 2020 to alleviate the impact of the COVID-19 pandemic.

Companies that reach the above-mentioned threshold of annual revenue of over THB 200 million and are thus required to submit a TP disclosure form should take note that Thailand signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters on 3 June 2020, becoming its 137th signatory.

Once ratified, Thailand must legislate, implement, and follow the automatic exchange of information requirements known as the Common Reporting Standard and Country-by Country-Reporting (“CbCR”), which requires the automatic exchange and reporting of certain taxpayer information to other countries’ revenue departments.

Companies should therefore implement procedures to strictly comply with their tax obliga-tions, including the preparation of a comprehensive transfer pricing documentation. As a member of the international community, Thailand will need to enforce all its obligations under multilateral treaties to avoid being blacklisted. In addition, the impact of the COVID-19 pandemic on the Thai tourism industry and economy as a whole will force the Thai authorities to increase their scrutiny on taxpayers to boost fiscal earnings.