Information / documents required for the local transfer-pricing file

Under Section 71 ter of the Revenue Code, corporate taxpayers which have related parties, as defined by the Revenue Department, and which have annual turnover of at least THB 200 million, are required to prepare and file a transfer-pricing disclosure form within 150 days of the end of the accounting period. The Revenue Department may send a written notice to corporate taxpayers to submit transfer-pricing documentation (“local file”) up to five years after the date on which the transfer-pricing disclosure form is filed.

Keywords: Mazars, Thailand, Tax, Transfer-pricing, Revenue Code, Revenue Department, Advance Pricing Agreement

1 November 2021

On 4 October 2021, the Revenue Department published Notification of the Director-General of the Revenue Department on Income Tax No. 407 (the “Notification”) dated 30 September 2021 to specify the information / documents required for the local file.

The following information / documents are required:

1. Information / documents about the reporting entity

(a) The nature of the business, a local organizational chart, the number of employees, the value chain, key business partners, key competitors, the business strategy and economic situation.

(b) The relationship between the reporting entity and related companies, as well as shareholding information.

(c) Details of any business restructuring between the reporting entity and related companies during the given accounting period or a prior accounting period, as well as differences in the nature of the business and business strategies before and after the restructuring, and the impact on the reporting entity’s turnover.

(d) Details of any intangible assets transferred to / from related companies during the given accounting period, as well as the impact on the reporting entity’s turnover.

2. Information / documents about controlled transactions of the reporting entity

(a) Types of controlled transactions, counterparties, countries or economic zones of counterparties, and the value of controlled transactions.

(b) Details of each type of transaction under (a) and the pricing policy, as well as the assumptions used to determine prices, except where transactions in (a) are insignificant.

(c) A list of all contracts related to each type of transaction described in (b), along with a summary of the essence of the contract, including the conditions related to the contract price.

(d) A functions, assets, and risks (FAR) analysis of the reporting entity and counterparties in transactions described in (b), and any differences in the FAR analysis from the previous accounting period.

(e) Financial information used to determine the price used for each type of transactions described in (b).

(f) The transfer-pricing methods chosen by the reporting entity for each transaction in (b), together with the reasons for choosing a certain method and for not choosing other methods.

(g) Descriptions of comparable uncontrolled transactions, or comparable independent companies, and financial indicators, including the interquartile range, along with a description of processes and sources of information.

3. Other information / documents as required by tax officials.

The information / documents under 2 (g) above are not required if the reporting entity meets the following qualifications during the accounting period:

3.1 The reporting entity has the following characteristics:

(a) It earns income in the accounting period NOT exceeding THB 500 million.

(b) It does NOT have controlled transactions with related-party companies paying different corporate income tax rates.

(c) It does NOT have controlled transactions with related-party companies registered in foreign countries.

(d) It does NOT have a net loss in prior accounting periods carried forward to be used in the given accounting period, and the related-party companies in controlled transactions do not have similar net losses.

3.2 The reporting entity has requested an Advance Pricing Agreement (“APA”), but only for information relating to controlled transactions that are subject to an APA which is still in effect for the given accounting period.

The local file must be in Thai.

The Notification shall be effective for accounting periods starting on or after 1 January 2021.