On 6 November 2020, Mr. Apisak Tantivorawong, the Minister of Finance issued Ministerial Regulation No. 369, published in the official bulletin 2556. The regulation sets basic rules to be followed by the tax authority when evaluating transactions between related parties. The Ministerial Regulation No. 369 identifies the following 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; and
- Commercial or financial conditions between related parties that result in a transfer of profits between related parties via (i) a difference in interest rates or any other financial fees, (ii) a difference in price, terms or payment methods for the goods or services, and (iii) a difference in other income or expenses, as compared to comparable independent transactions under the same circumstances.
Ministerial Regulation No. 369 requires tax authorities to assess or adjust income and expenses between related parties in order to put them at arm’s length using an internal comparable approach or an external comparable approach.
