Transfer pricing in Thailand - KPMG Global
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Thailand: Transfer pricing regime pending public comments, final steps

Transfer pricing in Thailand

The Thai Revenue Department announced a public hearing with respect to draft transfer pricing rules. Comments are requested by 7 July 2017.


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The draft transfer pricing measures were approved by the Thai cabinet in May 2015, thereby sending the draft to the National Council of State (Krisdika). The draft measures were then recently approved by Krisdika and are now in the public consultation process (pursuant to constitutional laws). As the final step, the draft would need to be passed to national legislative assembly for enactment. 

The aim of these transfer pricing provisions would be to prevent tax evasion from transfer prices applied to transactions between related parties; to provide standard guidelines as to how to determine a market price that is in line with international standards; and to achieve fairness in taxation.  

Transfer pricing provisions

Draft transfer pricing legislation would add new provisions (section 35 ter, section 71 ter, and section 71 bis) to the Thai Revenue Code. Key aspects of the proposals include:

  • Draft section 71 bis (1): If, upon examination, a tax officer determines that the taxpayer entered into a transaction with a related party under commercial and financial conditions that differ from those that would apply to transactions between independent parties, the tax officer would have the authority to amend what has been reported as assessable income and/or allowable deductions of the taxpayer. The tax officer would be allowed to take into account an income tax treaty for the avoidance of double taxation that Thailand has entered into with another country in order to meet international standards.

  • Draft section 71 bis (2): The Thai Revenue Code defines “related entity” or “related juristic partnership” as:
    • An entity that holds, directly or indirectly, at least 50% of the total share capital of another entity. 
    • A shareholder or partner who is shareholder or partner in another entity, and that either, directly or indirectly, owns more than 50% of total capital shares. 
    • An entity (taxpayer) that is related to another entity by way of capital or management, or having the authority to control that other entity, so that the other entity cannot perform independently from the taxpayer.
  • Draft section 71 bis (3): Taxpayers that had their assessable income or allowable deductions adjusted by a tax officer pursuant to section 71 bis (1) could claim a tax refund. Taxpayers could file a request for a tax refund within three years from the tax return submission date or within 60 days after the receipt of an adjustment notification from a tax officer.

  • Draft section 71 ter (1): Entities with related-party transactions, and whose income is greater than “minimum income” (to be determined by ministerial regulation) would prepare a report pertaining the relationship and amount of related-party transactions for the fiscal year and submit that information to the tax authority together with submission list within a prescribed deadline (the filing due date for the annual tax return, within 150 days after from the closing date of accounting period). 

  • Draft section 71 ter (2): Within five years from the deadline (listed above under draft section 71 ter), the Thai Revenue Department could request that entities with related-party transactions and whose income exceeds a to-be-determined threshold, would have submit supporting documents or evidence that would allow for an analysis of transfer pricing rules—a transfer pricing documentation requirement. The taxpayer would have to submit the transfer pricing report or documentation by a date that is 60 days from the date the notification is received. At their discretion, the tax authorities could extend the deadline, but not more than 120 days from the notification date.

  • Draft section 35 ter: Entities that fail to comply with these provisions or that submit incomplete or incorrect documentation without a reasonable explanation would be subject to a penalty of up to 200,000 Baht. 

KPMG observation

Tax professionals believe that finalization and enactment of the transfer pricing regime is imminent, and therefore urge taxpayers with related-party transactions to take time now to:

  • Conduct a transfer pricing “health check” to evaluate their potential transfer pricing risks and to consider present opportunities for addressing any potential noncompliance with the proposed regime  
  • Prepare the required transfer pricing documentation (including a local benchmarking study) in advance of the final steps


Read a June 2017 report prepared by the KPMG member firm in Thailand

Read a July 2017 report prepared by the KPMG member firm in Thailand

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