Transfer pricing is the concept that business transactions should be at market value or arm's length. In other words, this means that a business transaction should be made at a value that two independent parties without pay.
Thailand recently updated its transfer pricing law on November 21, 2018 and is in force as of January 01, 2019. The new transfer pricing law states in relevant part as follows:
"In the case where companies with relationships with each other have commercial or financial requirements differently from that should have been specified if said companies had operated businesses independently, in a description that can be believed that there are transfers of profits, the Revenue Department shall have the power to adjust the incomes and expenses of said companies so as to obtain the amounts of incomes receivable and expenses payable should said companies have operated businesses independently."
The new transfer pricing law gives the Revenue Department the power to adjust the income and/or expenses of Thai companies if they determine them not to be made at market value or arm's length. These adjustments will resulting in additional tax liability due to additional income being assessed or the adding back of non-deductible expenses.
The new transfer pricing laws applies to Thai companies that have a relationship with another company as defined by the transfer pricing law and has annual income of 200 million Baht or more. “Related parties” is defined under the transfer pricing law as two or more parties with the following relationships:
Businesses subject to the transfer pricing law are required to do the following:
Businesses subject to the transfer pricing law should be aware of the following:
Our Transfer Pricing service includes the following: