Transfer pricing in Thailand at a glance
|Regulation Type||National regulations based on OECD Guideline|
|Are there specific transfer pricing regulations?||Yes|
|Submission deadline||CIT deadline (150 days from year-end closing date)|
|Submission deadline upon request||In a ‘timely manner’|
|Annual update required||Yes|
|Official language requirements||English, Thai|
|Potential impact of penalties||Baht 400,000 (approximately EUR 10,000)|
Thai tax law
Rules for transfer pricing in Thailand are based upon:
- Thai Revenue Code Section 65 (13, 14 and 15), Section 65 bis (4 and 70) and Section 70 ter,
- Standard Accounting No. 37 and 47
- Transfer pricing guidelines: Departmental Instruction No. Paw. 113/2545 (DIP 113)
The Thai transfer pricing guidelines generally follow the OECD Transfer Pricing Guidelines (“OECD Guidelines”), including the allowance of all the methods acceptable under the OECD Guidelines.
Accepted methods are:
- The comparable uncontrolled price method;
- The resale price method;
- The cost plus method, and
- Other methods that are acceptable by international standards and that appropriately apply to the actual transactions.
Priority of methods
Rules for transfer pricing in Thailand prescribe that the transactional methods are preferred over the profit methods.
Information that should be included in the documentation:
- The structure and relationships between business entities within the same group, including the structure and nature of business carried on by each entity
- Budgets, business strategies and the reasons for adopting those strategies
- Taxpayers’ business strategies and the reasons for adopting those strategies
- Sales and operating results and the nature of transactions between business entities within the same group
- Reasons for entering into international transactions with business entities in the same group
- Pricing policies, product profitability, relevant market information and profit sharing of each business entity
- Functions performed, assets utilized and risks assumed by the related business entities should all be considered
- Support for the particular method chosen
- Where other methods have been considered, details of those methods and the reasons for their rejection (contemporaneously documented)
- Evidence supporting the negotiation positions taken by the taxpayer in relation to the transactions with business entities in the same group and the basis for those negotiating positions
- Other relevant documentation (if any) supporting the transfer prices
Language requirements in Thailand prescribe that documentation is accepted in English. However, upon request a translation has to be provided.
Requirements to prepare documentation annually
Documentation in Thailand should be updated annually, together with the corporate income tax returns. This means that the documentation should be submitted within 150 days from the year-end closing date.
Submission deadline upon request by tax authorities
Upon request, documentation must be submitted in a timely manner.
Advanced Pricing Agreements
Rules for transfer pricing in Thailand provide an option to obtain Advanced Pricing Agreements (APA). However, current practice shows that it is impossible to obtain a unilateral APA.
The term of bilateral APAs may be three to five years.
When a taxpayer in Thailand fails to comply with submitting the documentation on time or when a taxpayer provides incorrect information a penalty with a maximum of Baht 400,000 may be imposed.