Pursuant to Section 71 ter paragraph 2 of the Thai Revenue Code, the Revenue Department has issued Director General Notification (DGN) No. 407 dated 30 September 2021 providing clarification on transfer pricing documentation requirements. It prescribes the list of information and documents that must be included in the transfer pricing documentation to be submitted to the assessment officer. The DGN mandates that the information must be prepared in Thai language.
The DGN is applicable for accounting period commencing on or after 1 January 2021.
Moreover, the DGN confirms the criteria for certain juristic companies that are not required to undertake benchmarking analysis on a yearly basis. These are:
1. Companies meeting all the following conditions:
- Revenue of not exceeding THB 500 million during the accounting period;
- No transaction with a related party that is subject to a different corporate income tax rate;
- No transaction with an offshore related party; and
- The related parties entering into a transaction do not have tax losses (brought forward or current) that can be utilized as a tax expense for CIT purposes in the accounting period.
2. Companies that have specific agreement with a competent authority in Thailand (e.g., advance pricing agreement).
These entities are only exempt from conducting a yearly benchmarking analysis. They are not exempt from preparing a transfer pricing policy containing the details of the functions performed, assets utilized, and risks borne. The document must include all the prescribed information and supporting documents.
BDO Insight: It is evident that the coverage of the TP regulation is not limited to cross-border transactions. We have mentioned this time and again as there is always an opportunity for shifting revenue or expense if a member of the Group is enjoying tax incentives (e.g., BOI promoted enterprises) or has incurred tax losses (brought forward or current). The threshold of THB 500 million revenue merely grants a relief from preparing a yearly benchmarking study, not a transfer pricing policy. The threshold for the mandatory submission of the TP disclosure form remains unchanged, i.e., THB 200 million.
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