Transfer pricing in Thailand: Why the right advisor can make all the difference

If you have been wondering whether it is time to work with a TP advisor, here is why the answer might be yes.

1. TP in Thailand: A quick refresher
   Back in 2002, the Thai Revenue Department introduced Guideline No. Paw. 113/2545, which aligned with international practices under the OECD’s Arm’s Length Principle. Then, a major shift came with the Revenue Code Amendment Act No. 47, effective 1 January 2019, which formally introduced transfer pricing rules into Thailand’s Revenue Code. This landmark legislation empowered the Thai Revenue Department with enhanced authority to adjust income and expenses when related-party transactions deviate from arm’s length principles, promoting fair taxation and greater transparency.
   Building on this momentum, the Thai Revenue Department introduced the Transfer Pricing Disclosure Form, TP Local File, and Country-by-Country Report. These tools help businesses demonstrate compliance and prove that their transfer pricing policies align with market standards.
   For more details, please explore our comprehensive TP brochures. 
    
2. Allow your team to focus on core responsibilities
   The preparation of TP Local File and Transfer Pricing Disclosure Form, particularly in light of recent regulatory developments, can be both time-intensive and complex. Tasks such as analyzing intercompany pricing, compiling transactional data, and completing required disclosure forms can place a significant burden on internal resources.
    
3. Understand the consequences of non-compliance
   With transfer pricing regulations now embedded in Thai law, non-compliance can result in significant financial and regulatory consequences. If the Thai Revenue Department determines that transactions between related parties were not conducted at arm’s length, it has the authority to adjust the reported income or expenses of the taxpayer, potentially resulting in an additional tax liability, penalty and surcharge, as well as a fine of up to THB 200,000 for failure to submit complete and accurate disclosure.
   Proper documentation and a defensible transfer pricing approach are essential to mitigate these risks.
    
4. Ensure the effectiveness of your TP disclosure
   Thai companies with annual revenues of at least THB 200 million are now required to submit the Transfer Pricing Disclosure Form. This form necessitates comprehensive information regarding related parties and the nature of intercompany transactions, including service fees, royalties, and intercompany loans.
    
5. Tailored approaches for transfer pricing compliance
   Transfer pricing is not a one-size-fits-all exercise. Each business operates under a unique model, and what is appropriate for a distributor may not suit a service provider or manufacturer. An experienced advisor will take the time to understand your specific operations, value drivers, and industry context, and will help you identify the most appropriate transfer pricing method and approach to support compliance and defending a challenge by the Thai Revenue Department.
    
6. Stay ready for what’s next
   While the core transfer pricing legislation in Thailand is already in effect, further regulatory guidance is anticipated. To ensure ongoing compliance, taxpayers must remain vigilant and adaptable.
    
7. A growing trend among Thai businesses
   More companies in Thailand are taking a proactive approach to transfer pricing, i.e., reviewing their current practices, improving documentation, and planning ahead for compliance. This reflects a growing awareness that being prepared is not just about meeting regulations, but also about staying ready and confident if the Thai Revenue Department conducts a review.
   
   Conclusion: Accuracy and compliance are essential
   Transfer pricing in Thailand is now more clearly defined than ever, bringing greater transparency and accountability. With this increased structure comes a heightened responsibility for businesses to ensure compliance. The positive news is that you do not have to navigate these complexities alone.
   A trusted transfer pricing advisor can guide you through the regulatory landscape, assist in fulfilling your obligations, and help you establish a well-supported transfer pricing strategy, all while allowing you to dedicate more time and resources to growing your business.
   If you would like to talk more about how to get started or strengthen your current TP approach, we are happy to help.