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Thailand’s New Transfer Pricing Demands

11th January 2022

Thailand may not be a member of the OECD, but that doesn’t mean it’s not serious about tackling base erosion and profit shifting. Last fall, Thai Revenue released new mandatory transfer pricing documentation requirements, which incorporate reporting highlights from the OECD—and add to them. If you have business in Thailand, pay attention—the regulations apply to periods on or after January 1, 2021. In other words, now. So, what does Thai Revenue want to see?  A big-picture overview should include the master file’s greatest hits: information about the nature of the business, including an org chart, a value chain, and business strategies. But you’ll also have to include information about key clients and competitors. Information about related-party transactions must be documented as well. Thai Revenue wants specific information, including the nature of the transactions, details about the foreign related party, the price-setting policies, any assumptions used in price setting, and summaries of relevant contracts. A functional analysis, including changes to prior years, is mandatory, as is other OECD standards: financial information used to determine the transfer price, how the transfer pricing method was implemented, and relevant details regarding the benchmarking study—assuming you have to do one. If the taxpayer’s total revenue is less than THB500 million ($15 million), then the company is exempt from the comparability analysis, including the comparable search strategy and results. And let’s not forget the country-by-country report, which is also required for companies meeting certain criteria, including an annual consolidated revenue threshold of THB 28 billion (roughly $839 million or 740 million), a little lower than 750 million threshold recommended by the OECD. The CbC report reveals information about a company’s financials and may be shared with other tax authorities. Another hoop to jump through? Thailand’s transfer pricing documentation must be completed in Thai, but the CbC report needs to be in English. But perhaps the most distinguishing factor is the deadline. While most countries allow the CbC report to be filed within 12 months after the end of the ultimate parent entity’s fiscal year end, Thai Revenue wants it filed within 150 days after the fiscal year end with the corporate tax return—a very tight turnaround.