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Transfer Pricing — Arm's Length Adjustment under Section 65 bis (4) and the TP Act
Multinational Group Thai Subsidiary v Revenue Department
Composite summary — not a single reported case. This entry distils a settled line of Thai Supreme Court (Dika / ฎีกา) authority for legal education. It is not a transcript of one reported judgment, and the heading is not a citable case number. Do not cite it as specific case law — consult a Thai-qualified lawyer for the authoritative Dika number and current application.
Facts
A Thai subsidiary of a multinational group transacted with related foreign entities — for example, paid management fees, royalties, intra-group financing, or sold goods/services to its parent — at prices that the Revenue Department considered below or above arm's length. The Revenue Department issued an assessment adjusting the prices, increasing taxable income, and demanding tax, surcharge, and penalty.
Legal Issue
Whether the Revenue Department may adjust related-party prices under Section 65 bis (4) of the Revenue Code and (since 2019) the Transfer Pricing Act, and what evidentiary burden each side bears.
Holding
The Supreme Court — Tax Division has confirmed that the Revenue Department has authority to adjust related-party transactions to reflect arm's length pricing, where the taxpayer cannot satisfactorily justify the pricing. The taxpayer bears the practical burden of producing comparable data and a defensible transfer pricing analysis. Without contemporaneous documentation, adjustments and penalties are typically upheld. Since the Transfer Pricing Act B.E. 2562 (2019) came into force, larger taxpayers must file a disclosure form and prepare a master/local file consistent with OECD standards.
Reasoning
Section 65 bis (4) is the long-standing domestic source of arm's length adjustment authority. The 2019 TP Act formalises documentation requirements and aligns with OECD BEPS. The burden allocation reflects the fact that the taxpayer alone holds the underlying data on intra-group transactions.
Significance
Central to all multinational Thai operations and increasingly to mid-sized groups (revenue threshold THB 200 million applies). Drives the standard 'master file / local file / disclosure' compliance package.
Practical Takeaway
Multinationals operating in Thailand should prepare contemporaneous TP documentation BEFORE filing, not in response to an audit. Benchmark studies and intercompany agreements should reflect the actual conduct of the parties.
Cited Statutes
- Revenue Code, Sections 65 bis (4), 65 ter
- Transfer Pricing Act B.E. 2562 (2019)
- Revenue Departmental TP regulations and OECD TP Guidelines (referenced in practice)
This entry summarises a representative line of authority from the Thai Supreme Court (ฎีกา). It is intended for general legal education only and is not a substitute for advice from a Thai-qualified lawyer. Individual Dika case numbers are being verified against primary sources; until then these entries are presented as composite doctrinal summaries.
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