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