The journey of enacting Thailand’s transfer pricing law has come to an end. Royal Decree No.47, which was issued on 18 November 2018 to amend the Revenue Code to introduce the transfer pricing law (“TP Law”), was published in the Royal Gazette on 21 November 2018. We have summarized below the key points under the TP Law.
As Taxpayers will be required to file the mandatory Report under the new TP Law in 2020 (along with PND 50 for the 2019 fiscal year), we anticipate that tax officers will focus more and more on transfer pricing investigations. In our experience, there have been significant increases in transfer pricing queries and audits conducted by the TRD over the last few years. As a result, KPMG strongly recommends that Taxpayers should pro-actively start preparing for the new Thai TP framework by introducing compliance procedures for transfer pricing disclosure and documentation that are in line with the new TP law, as part of their transfer pricing policy.
Taxpayers should also start preparing robust transfer pricing analysis and documentation. This will be essential for effective management of the risks associated with Thailand’s strict documentation requirements and the new detailed transfer pricing regulations that are expected to be issued under the TP Law. Robust transfer pricing documentation will also be key to support negotiations with the tax authorities on future proposed adjustments or the imposition of any penalties.
It would normally take time to prepare appropriate transfer pricing documentation for Thai tax purposes. Therefore, Taxpayers should prepare such documentation early, well in advance of the Report deadline and certainly before receiving an Official Request from the TRD.