The Thai Revenue Department (“TRD”) has released its comments addressing the main issues and questions raised by the public stakeholders on the revised draft of the Transfer Pricing law under the process of public consultation held this year.
The Thai Revenue Department (“TRD”) has released its comments addressing the main issues and questions raised by the public stakeholders on the revised draft of the Transfer Pricing law under the process of public consultation held this year. (“Are you ready for upcoming transfer pricing regulations?”)
The process of public consultation on the revised draft of the Transfer Pricing law was conducted from 20 June to 7 July 2017 with a total of 49 stakeholders involved. Approximately 90 percent of the stakeholders agreed the Transfer Pricing law should create transparency, reduce base erosion and profit shifting among multinational enterprises and prevent double non-taxation.
The key highlights from the comments and additional clarifications provided by the TRD are summarized below:
For the next steps, the TRD should now submit the result of the process of public consultation on the draft Transfer Pricing law to the Cabinet of Thailand for consideration. KPMG is of the opinion that, as the majority of the involved stakeholders agreed with the proposed draft of the law and considering that the TRD has provided sufficient clarifications on the raised issues, the probability of the Cabinet of Thailand approving the draft Transfer Pricing law at this stage should be considered high leading to the enactment of the law in the near future.
More than ever, multinationals investing in Thailand and Thai corporations investing outbound should be more prudent about their transfer pricing arrangements and prepare for the reform that will aim to focus on where the economic activities are undertaken and values created. The companies should identify any eventual non-arm’s length transfer pricing methods or prices of related party transactions and aim for the introduction of compliance requirements for transfer pricing disclosure and documentation as part of its transfer pricing policy in line with the draft Transfer Pricing law.
Meeting the future mandatory requirements will help you manage risk within the current environment of detailed transfer pricing regulations, strict documentation requirements, sophisticated audit practices, and significant penalties for non-compliance. Pro-active preparation of robust transfer pricing analysis and documentation will be essential to negotiate with the tax authorities on future proposed adjustments and reduced penalties.
KPMG professionals in the Transfer Pricing group advise multinational corporations investing inbound and Thai corporations investing outbound on transfer pricing solutions to their value chain issues. Our Transfer Pricing team is prepared to provide risk assessment reports in line with your global transfer pricing strategy to enable you to navigate through the complex and fast-changing transfer pricing environment resulting from the new regulatory changes in Thailand as well as to support you preparing transfer pricing documentation under the new requirements.
© 2021 KPMG Phoomchai Tax Ltd., a Thailand limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.