Thailand: Guidance implementing rules for transfer pricing and related-party transactions

Thailand: Transfer pricing, related-party transactions

The Director-General of the Thai Revenue Department on 14 January 2021 issued two notifications as guidance relevant to transfer pricing and related-party transactions. The notifications were issued to implement Thailand’s new transfer pricing law.


Notification DGN-CIT No. 400

The key components in notification DGN-CIT No. 400—applicable to all accounting periods beginning on or after 1 January 2021—are substantially similar to those provided in a draft version in June 2019 (read TaxNewsFlash).

However, there are some changes in the final version of the guidance such as:

  • For service transactions, the final guidance states that compensation for service transactions arising for the benefit of shareholders is not to be treated as compensation established independently.
  • For intangible assets, the final guidance provides that functions regarding activities in “development, enhancement, maintenance, protection, and exploitation” (DEMPE), taking into account the assets employed and risks assumed, must be considered for comparability purposes.

Secondary adjustments

The draft version (June 2019) of the guidance indicated that there would be a secondary transfer pricing adjustment (consistent with the tax authority’s practice under recent transfer pricing audits). According to the draft version and in line with the practice of the tax authority, when a primary transfer pricing adjustment is made resulting in higher profits for one taxpayer, if the counterparty of the controlled transaction is a shareholder of the taxpayer, then the transfer pricing adjustment amount after deducting additional corporate income tax would be deemed to be a dividend or profit sharing and subject to withholding tax (at a rate of 10%) based on local tax law. If the counterparty is not a shareholder of the taxpayer, the amount of the transfer pricing adjustment after being reduced for the additional amount of corporate income tax would be deemed as an interest payment subject to withholding tax at the applicable rate based on local tax law.

DGN-CIT No. 400, however, indicates that secondary adjustments will be made in accordance with section 70 and section 70 bis of the Thai Revenue Code (a broader standard).

DGN-TP on transfer pricing reporting guidelines

In addition to revoking the previously issued notifications (in general, guidance regarding transfer pricing documentation for related-party transactions and including DGN-CIT No. 372), the second notification (DGN-TP) provides guidelines on the process for filing a transfer pricing disclosure form.

Under DGN-TP—applicable for fiscal years beginning on or after 1 January 2020—the transfer pricing disclosure form must be filed by a taxpayer or by a company or juristic partnership on behalf of a related company or juristic partnership that is required to submit a transfer pricing disclosure form for the accounting period.

  • Companies or juristic partnerships required to file a transfer pricing disclosure form must register to make an electronic submission via the Thai Revenue Department’s online submission platform ( or via the Ministry of Finance’s electronic tax service (
  • If a company or juristic partnership cannot submit the transfer pricing disclosure form via the online platform, the form may be downloaded and printed out from the tax agency’s website and then submit the paper version to their respective Revenue Office along with a letter to the Director-General explaining the reasons why the disclosure form cannot be filed electronically.
  • Filing of the transfer pricing disclosure form is deemed completed only when the company or juristic partnership receives a reference number and receipt of a successful filing.

KPMG observation

With additional guidance now having been released with respect to preparation of the transfer pricing documentation as required under Thailand’s new transfer pricing law, multinationals investing in Thailand and Thai corporations entering into related-party transactions and having total income from business operations (or related income derived from business operations) of at least THB 200 million need to consider preparing their transfer pricing analysis and documentation. This preparation will not only be essential for the effective management of the risks associated with Thailand’s new transfer pricing law and its strict documentation requirements, but will also be critical in supporting negotiations with the tax authorities regarding future proposed primary and secondary transfer pricing adjustments or any assessed penalties.

Read a January 2021 report prepared by the KPMG member firm in Thailand

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