Thailand: Draft transfer pricing legislation

Thailand: Draft transfer pricing legislation

The Thai cabinet has approved draft transfer pricing legislation that, if enacted, would amend the tax law of Thailand to apply transfer pricing rules to transactions between related parties.


Related content

Broadly, the draft legislation would add measures to the Thai tax law that would:

  • Define the criteria for determining transfer pricing rules to be applied to transactions between “related entities” (i.e., two entities that have a direct or indirect relationship in respect to capital, management or control)
  • Allow a tax officer to make adjustments to assessable income and allowable deductions, and to determine the period of limitations for tax refunds

Transfer pricing documentation

An entity that would be subject to the new transfer pricing rules would be required to prepare, and submit to the Revenue Department, documentation setting forth: (1) its direct and indirect relationships with other entities in respect of capital, management or control; and (2) its method for calculating the intercompany income and expenses.  

Transfer pricing documentation would be required to be submitted within 150 days after the last day of the accounting period.  A taxpayer’s failure to prepare or submit the complete documentation would be subject to a penalty, of up to 400,000 THB (approximately U.S. $12,000).

KPMG observation

Given the anticipated application of new transfer pricing rules and transfer pricing documentation requirements, it may be prudent for entities to act now, and start to prepare to manage their transfer pricing risks and compliance before the transfer pricing law is enacted by reviewing their current transfer pricing policy and any potential risks; determining a plan of action for managing any transfer pricing exposure; and preparing transfer pricing documentation with a local benchmarking study.

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