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November 4, 2021
2021-2016

Thailand publishes mandatory requirements for submission of Thai transfer pricing Country-by-Country reports

Executive summary

The Thai Revenue Department published Notification of Director-General of Revenue Department No. 408 (the Notice) on 30 September 2021, outlining the key requirements for the submission of a Thai transfer pricing Country-by-Country (CbC) report in Thailand, applicable to fiscal years staring on or after 1 January 2021. The CbC report is required to be submitted together with the annual corporate income tax return (PND 50) within 150 days after the fiscal year end.

As the Notice is issued under Section 17 of the Revenue Code, the penalty for failure to submit a CbC report by the due date should be a fine not exceeding THB2,000 (US$60).

This Alert summarizes the key requirements for the CbC report.

Detailed discussion

Mandatory requirements for submission of transfer pricing CbC report

Group revenue threshold

A multinational enterprise (MNE) group with consolidated revenue1 of not less than THB28,000 million (US$840 million) in the immediately preceding fiscal year is required to submit a CbC report, subject to the requirements below. If the preceding fiscal year was less than 12 months, the revenue threshold is determined proportionately.

Thai corporate taxpayers, exceeding the group revenue threshold, who are required to submit a CbC report

  • A Thai ultimate parent entity of an MNE group

  • A Thai subsidiary of an MNE group where any of the following applies:

    • The ultimate parent entity of the MNE group is not required to submit a CbC report in its country of residence for tax purposes.

    • The ultimate parent entity of the MNE group is required to submit a CbC report in its country of residence for tax purposes, but that country does not have an agreement for the exchange of information with Thailand, or such agreement was not yet effective during the reporting period.

    • There is a systematic failure during information exchange.

  • A Thai subsidiary is appointed as a surrogate by the ultimate parent entity of the MNE group.

CbC report submission exemption for a Thai subsidiary of an MNE group

A Thai subsidiary of an MNE group will be exempt from the CbC report submission requirement if all of the following apply:

  • The ultimate parent entity has appointed a surrogate to submit CbC reports in other countries.

  • The surrogate office is a tax resident of country that has an effective agreement for the exchange of information with Thailand.

  • There is no systematic failure during information exchange.

  • The surrogate office has notified its Competent Authority of its surrogate status for CbC report filing purposes.

  • The Thai subsidiary has notified the Thai Competent Authority of the ultimate parent entity's appointment of a surrogate office for CbC report filing purposes.

Documentation language

The CbC report document submission is required to be prepared in English.

Timeline for submission

The 150-day timeframe is relatively short, as compared to other countries requiring the filing of a CbC report allowing up to 12 months. Given the short timeframe for CbC report preparation, it is important that a Thai taxpayer required to file a CbC report is aware of the timeline and be well prepared to gather the required information, especially if the taxpayer does not prepare consolidated financial statements.

Implications

The potential impact of the Thai CbC reporting requirement is substantial. The CbC report will be shared among the countries listed in the CbC report that have agreements for the exchange of information. This will allow the relevant tax authorities to undertake further transfer pricing reviews or investigations not only by the tax authority in the CbC report filing country, but also by the relevant authorities in other tax jurisdictions in which the MNE group operates.

Thai corporate taxpayer should review their Thai transfer pricing CbC reporting position to ensure compliance with the requirement 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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ENDNOTE

  1. If the ultimate parent entity does not prepare consolidated financial statements, the MNE group's consolidated revenue for CbC report filing purposes must be determined in accordance with generally accepted accounting principles.

 

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