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Transfer Pricing Compliance
Thailand's transfer-pricing regime under the Revenue Code Amendment Act (No. 47) B.E. 2561 (2018) — arm's-length principle, related-party disclosure form, contemporaneous documentation, and Country-by-Country reporting.
Overview
Thailand codified its transfer-pricing rules in the Revenue Code Amendment Act (No. 47) B.E. 2561 (2018), which added Sections 71 bis and 71 ter to the Revenue Code and is commonly referred to as the 'Transfer Pricing Act'. The rules apply the arm's-length principle to transactions between related parties (defined by 50% direct or indirect shareholding, or by common control). Companies with annual revenue of at least THB 200 million must file an annual related-party transaction disclosure form together with their corporate income tax return (PND 50), and must maintain contemporaneous transfer-pricing documentation. Multinational groups with consolidated revenue above THB 28 billion must also file Country-by-Country (CbC) reports under separate Revenue Department notifications implementing the OECD BEPS Action 13 framework.
Key Points:
- Legal basis: Revenue Code Amendment Act (No. 47) B.E. 2561 (2018) — พระราชบัญญัติแก้ไขเพิ่มเติมประมวลรัษฎากร (ฉบับที่ 47) พ.ศ. 2561, adding Sections 71 bis and 71 ter to the Revenue Code
- Arm's-length principle: related-party transactions must be priced as if between independent parties
- Disclosure-form threshold: companies with annual revenue ≥ THB 200 million must file the Disclosure Form together with PND 50
- Contemporaneous documentation: must be prepared and ready for submission within 60 days of a written request from the Revenue Department
- Country-by-Country (CbC) reporting: ultimate parent entities of multinational groups with consolidated revenue ≥ THB 28 billion file CbC reports under Revenue Department notifications
- Penalties: failure to submit Disclosure Form attracts fines up to THB 200,000; transfer-pricing adjustments carry the standard surcharge (1.5% per month) and 100% penalty on tax underpaid
- Advance Pricing Arrangements (APAs) — unilateral and bilateral — are available from the Revenue Department to reduce audit risk
Documentation Requirements
Thailand follows a three-tier OECD-style documentation regime: Disclosure Form, Local File, Master File, and (for larger groups) CbC Report.
- Disclosure Form (filed with PND 50, threshold THB 200 million revenue) — summarises related-party transactions by type and counterparty
- Local File — contemporaneous documentation describing the Thai entity, its related-party transactions, functional analysis, and transfer-pricing method (CUP, RPM, CPM, TNMM, Profit Split)
- Master File — group-wide overview of business, intangibles, financing, and tax positions
- CbC Report — group revenue / profit / tax / employees by jurisdiction; threshold THB 28 billion consolidated revenue
- Documentation must be retained for at least 5 years and produced within 60 days of Revenue Department request
Audits and Advance Pricing Arrangements
The Revenue Department's transfer-pricing audit unit reviews related-party pricing during normal corporate-income-tax audits and on a risk-targeted basis.
- Audit periods: standard 2-year reassessment period, extendable to 5 years where intent to evade is suspected
- Adjustments: Revenue Department can impute arm's-length income; the adjusted tax carries 1.5% per month surcharge and 100% penalty
- Corresponding adjustments may be available under tax treaties via the Mutual Agreement Procedure (MAP)
- Advance Pricing Arrangements (APAs): unilateral, bilateral, and multilateral APAs available; bilateral APAs negotiated under tax-treaty competent-authority provisions
- APA term: usually 3-5 years, renewable; provides certainty in exchange for upfront documentation
Relevance for Foreign Nationals
Any Thai entity that is part of a multinational group must take transfer pricing seriously from the moment its related-party transactions begin. Routine items such as intra-group management fees, software licences, intercompany loans, and inventory purchases must be benchmarked against comparables and documented contemporaneously. The 100% penalty on adjusted tax makes Thailand's regime among the harshest in ASEAN — a relatively modest pricing adjustment can produce a very large cash exposure once surcharge and penalty are applied.
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