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How is Thailand’s Local File Unique?

20th October 2021

If transfer pricing compliance in Thailand has been a bit of a gray area in the past, things should become clearer thanks to the Thai Revenue Department’s transfer pricing  guidance, released on September 30. The guidance, effective for fiscal years beginning on or after January 1st, 2021, spells out requirements for the local file and also explains which companies qualify for a benchmarking-study exemption. The Thai local file requirements adhere to OECD Guidelines, though in certain circumstances the tax authority wants more detail. For instance, the Thai tax authority wants to see how many employees work in the local entity, a value chain in the local file, also key suppliers, the relationship structure with shareholders, and the transfer pricing policy for the overall business as well as for each transaction. General best transfer pricing practices apply here, too: a robust functional analysis, financial information used in determining prices, and the transfer pricing method used for each transaction and why it was chosen. In terms of the benchmarking study, Thai Revenue expects a real analysis: Comparable uncontrolled transactions or independent companies with financial indicators; search methodologies; independent compensation ranges, and of course, include where your research stems from. Which companies are exempt from a benchmarking study? According to the new guidance, it’s companies with income less than THB 500 million; companies that don’t participate in cross-border transfer pricing transactions; and if the company—or the related party it’s doing business with—hasn’t carried losses forward in the accounting period. The local file must be prepared in Thai, and if you must submit it be sure to get a receipt number from Thai Revenue or the submission will be considered incomplete.