The Cabinet of Thailand approved a draft Act on Revenue Code Amendment on 7 May 2015. If enacted the Act would introduce specific transfer pricing provisions into the Revenue Code and also would amend the tax law of Thailand to apply transfer pricing rules to transactions between related parties.
The Act defines the criteria for determining the transfer pricing rules to be applied to transactions between “related parties” and also gives a new definition for ‘related parties’. According to the new rule two or more parties would be considered as ‘related parties’ if one owns shares in the other, they have a common management team or they are under common control (direct or indirect).
The new rule would allow for domestic transfer pricing adjustments. According to the new Act a tax officer would be allowed to make adjustments to related party transactions that were not entered into on an arm’s length basis. According to the new rule taxpayers with related party transactions will have to submit documentation on their relationship with the other party in terms of investment, management, or control (direct and indirect) and outline the adopted transfer pricing method for related party transactions. The required transfer pricing disclosures will have to be made within 150 days from the closing date of the accounting period and failure to do so would result in a penalty not exceeding Baht 400,000.
