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Thailand: New transfer pricing regulation

Thailand: New transfer pricing regulation

The Minister of Finance issued Ministerial Regulation No. 369 (published in the official bulletin 2556 on 6 November 2020) that essentially prescribes certain rules, conditions, and methods for tax officers of the Thai Revenue Department to assess or adjust the income and expenses of taxpayers that engage in related-party transactions but that do not comply with arm’s length principles—in particular, for those that result in the undue transfer of profits between related parties.


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Ministerial Regulation No. 369 identifies the following three commercial or financial conditions that are believed to induce a transfer of profits:

  • Commercial or financial conditions between related parties
  • Commercial or financial conditions between related parties that differ from those that would otherwise be agreed between independent parties
  • Commercial or financial conditions between related parties that result in a transfer of profits between related parties via (1) a difference in price, terms or payment methods for the goods or services, (2) a difference in interest rates or any other financial fees, and (3) a difference in other income or expenses, as compared to comparable independent transactions under the same circumstances

Ministerial Regulation No. 369 requires tax officers to assess or adjust income and expenses between related parties in order to put them at arm’s length using the following two methods: (1) an internal comparable approach, or (2) an external comparable approach.

KPMG observation

Ministerial Regulation No. 369 demonstrates that the tax authority is focusing more and more on transfer pricing, and the expectation is that there will be more rules, procedures, and conditions related to the implementation of Ministerial Regulation No. 369 at a later date.  Tax professionals have noted that Ministerial Regulation No. 369 mentions an external comparable approach using foreign entities, about which more details are expected.

To manage transfer pricing risk in advance, taxpayers may want to consider preparing and maintaining contemporaneously Local files with benchmarking studies. 

Read a November 2020 report prepared by the KPMG member firm in Thailand

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