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09 January 2018 Thai Cabinet approves draft transfer pricing act On 3 January 2018, the Thai Cabinet approved the draft transfer pricing act (the Draft Act) that will add specific transfer pricing provisions to the Revenue Code. This approval follows a public hearing held in July 2017 on the first draft Act that was approved in principle in May 2015.1 Subject to a legislative procedure and announcement, the Draft Act will be enacted and become effective for accounting years beginning on or after 1 January 2017. In the past, the tax authorities have relied on the internal departmental guidelines issued in 2002 for their transfer pricing audit purposes. The proposed provisions will provide clearer regulations on the implementation and enforcement of the Thai transfer pricing regime. Under the Draft Act, a corporate taxpayer will be required to prepare and file a disclosure statement with its annual corporate income tax return. The Draft Act also grants the tax authorities the authority to request additional documents and make adjustments to taxable income and deduction. Failure to comply with the annual disclosure statement requirement is subject to penalties. Taxpayers are required to prepare and file a disclosure statement with the annual corporate income tax return. The required statement must include, but is not limited to, descriptions of relationships of relevant related parties in terms of ownership, management or control and the total related-party value(s). Failure to provide the required disclosure statement or the filing of incomplete or false statements in the disclosure statement will result in penalties of Baht200,000 (US$6,200). Tax authorities are granted full authority to make adjustments to taxable income and deductions associated with related party transactions that were not at arm's length. For their transfer pricing audit purposes, the tax authorities can request additional documents within five years of the submission deadline. Corporate taxpayers that have annual income under a specified threshold (i.e., with income less than Baht30 million (US$930,000)), or higher based on the Ministerial Regulations to be released with the Act, will be exempt from the annual transfer pricing disclosure requirement. 1 See EY Global Tax Alert, Thailand releases draft transfer pricing act, dated 10 June 2015.
Document ID: 2018-5107 |
