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October 22, 2021
2021-1923

Thailand publishes mandatory requirements for Thai transfer pricing documentation

Executive summary

The Thai Revenue Department published the Notification of Director-General of Revenue Department No. 407 (the Notice) on 30 September 2021, outlining the information that must be included in transfer pricing (TP) documentation when it is requested by the Revenue Department.

Under Thai tax law, TP documentation is not required to be filed with the transfer pricing disclosure form.[i] However, the TP documentation is generally required to be provided within 120 days of receiving a request from the Revenue Department (or 180 days if it is a first-time request under the new TP Act, which is applicable for the first fiscal year starting on or after 1 January 2019).[ii]

This Alert summarizes the key TP documentation requirements applicable to fiscal years starting on or after 1 January 2021.

Detailed discussion

Mandatory requirements for TP documentation

Information on taxpayers

  • Nature of the business, organization chart (with number of staff), value chain, key clients and competitors, business strategy and economic circumstance
  • Group shareholding structure
  • Description and impact of any business restructuring and transfers of intangible assets

Information on related-party transactions

  • Details including the nature and value of transactions, information about the counter party, such as the name and country of incorporation, price setting policy and assumptions used in adjusting the price, and a summary of the content of the relevant contract, including key terms and conditions
  • Function, risks and assets analysis (including changes compared to prior year)
  • Financial information used in determining the transfer price
  • How the TP method was implemented, including tested parties
  • Details of the benchmarking study

Other information

  • Additional information may be requested in writing by the Tax Assessment officer with approval from the Director General of the Revenue Department.

Documentation language

  • The TP documentation must be prepared in Thai.

Prior year TP documentation requirements

The Notice only applies to TP documentation prepared for fiscal years starting on or after 1 January 2021. Therefore, TP documentation for fiscal years ending before 31 December 2021, which is prepared in English or Thai and is based on the TP guidelines (Paw 113/2545), should be acceptable to the Revenue Department.

Benchmarking study exemptions

A benchmarking study is not required if either:

  1. The taxpayer’s total revenue of the fiscal year is less than THB500 million (US$15 million), the taxpayer has only domestic related-party transactions, neither the taxpayer nor any of the relevant counter-parties have loss carryforwards for corporate income tax computation purposes and all are subject to the same corporate income tax rate.

  1. The transactions are covered transactions under a bilateral Advanced Pricing Agreement (APA) concluded with the Thai Revenue Department, and the relevant fiscal year is covered by the APA.

Implications

Thai companies should review their Thai TP documentation processes and procedures to ensure compliance with the requirements of the Notice.

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For additional information with respect to this Alert, please contact the following:

EY Corporate Services Limited, Bangkok

Ernst & Young LLP (United States), Thai Tax Desk, New York

Ernst & Young LLP (United States), Asia Pacific Business Group, New York

Ernst & Young LLP (United States), Asia Pacific Business Group, Chicago

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ENDNOTES

  1. See EY Global Tax Alert, Thailand publishes transfer pricing disclosure form, dated 27 November 2019.

  2. See EY Global Tax Alert, Thailand enacts Transfer Pricing Act, dated 3 December 2018.

 

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