Transfer Pricing


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:

  • One party directly or indirectly holds 50% or more of the capital of the other.
  • The same shareholder directly or indirectly holds 50% or more of the capital of both parties. 
  • The parties have a dependent relationship through participation in capital, management, or control of the other entity, as defined under the transfer pricing law.

Businesses subject to the transfer pricing law are required to do the following:

  • Submit a transfer pricing report form on the relationship between the parties and the total value of the related party transactions with the annual corporate income tax return form (PND 50).
  • Submit transfer pricing documents evidencing the value of the related party transactions upon request of the Revenue Department if made within five years after the filing of the transfer pricing report.

Businesses subject to the transfer pricing law should be aware of the following:

  • Transfer pricing documents must be submitted to the Revenue Department within 60 days after receiving an official request or within 180 days if it is the first time a request is made.  
  • The Revenue Department may approve an extension of the submission deadline for a period of up to 120 days. 
  • Failure to file the required transfer pricing report or to submit incomplete or incorrect documents without reasonable cause is subject to penalty of not more than 200,000 Baht.

Our Transfer Pricing service includes the following:

  • Advise on overall transfer pricing structure of the business.
  • Prepare annual transfer pricing report.
  • Prepare transfer pricing documents to support the value of the related party transactions.    
  • Assist with transfer pricing tax audit including drafting correspondence and meeting with the Revenue Department.
  • Assist with obtaining an Advance Pricing Agreement (APA) with the Revenue Department.
  • Correspondence by email, telephone and in person meetings when necessary.