On January 29, 2021, Thailand’s Revenue Department published the Notification of the Director-General of the Revenue Department Re: Income Tax (No. 400), which prescribes the criteria, methods, and conditions for Revenue Department officials on how to assess income and adjust expenses for transactions between related parties (as defined in Section 71 bis of the Revenue Code) that engage in intercompany transactions where conditions between the two parties in their commercial or financial relations differ from those that would be made between independent parties (i.e., where the transaction is not an “arms length” transaction). Those who are familiar with international transfer pricing standard practices will note that the measures under the notification generally follow the concept of chapters II, III, VI and VII of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. The key elements of the notification are summarized below. Accepted Transfer Pricing Methods The notification recognizes the following as accepted transfer pricing methods: Comparable Uncontrolled Price Method Resale Price Method Cost Plus Method Transactional Net Margin Method Transactional Profit Split Method The notification also requires that the arm’s length result of an intercompany transaction (i.e. the controlled transaction) must be determined using the most appropriate transfer pricing method. If none of the above transfer pricing methods is appropriate for the tested controlled transaction, the company may apply an alternate pricing method to the transaction by notifying the Director General of Revenue in writing, within the relevant accounting period, and describing the reason for doing so. Selection of the Most Appropriate Transfer Pricing Method  There is no formal order of preference for the use of the five accepted pricing methods. However, the notification requires the selection process to take account of the following factors: The respective strengths and weakness of the recognized methods; The appropriateness of

From September 1, 2021, foreign e-Service providers and e-Platform operators must register for and pay VAT in Thailand.

On January 26, 2021, the Thai government passed a resolution to reduce the government fees that are generally collected for the registration of a sale and mortgage of immovable property. The details of this were subsequently set out in two notifications issued by the Ministry of Interior and published in the Government Gazette on February 2, 2021, taking effect the following day. The notifications will remain in effect through December 31, 2021. These two notifications, which are part of the government’s relief efforts to soften the economic fallout of the COVID-19 pandemic, specify that government fees for the registration of a sale and mortgage of immovable property are reduced to 0.01% of the official assessed sale price (reduced from 2%) and 0.01% of the mortgage amount (reduced from 1%). In order to qualify for the reduced rates, the sale and mortgage must be registered at the same time, and the sale price and mortgage amount must not exceed THB 3 million (approximately USD 100,000). The reduced rates only apply to the sale and mortgage of detached houses, semi-detached houses, row houses, commercial buildings, and condominium units, and they must be sold by a licensed developer or authorized government authority. For more information on these notifications, or on any aspect of the Thai government’s COVID-19 relief measures, please contact Tilleke & Gibbins at [email protected] or +66 2056 5555.

The Royal Decree on Land and Building Tax Reduction (No. 2) B.E. 2564, which we previously noted was under consideration, has been officially promulgated. The royal decree, which was announced and published in Thailand’s Government Gazette on January 31, 2021, and came into effect the following day, will effectively reduce land and building tax payments by 90% in 2021 for the following types of land and buildings: Land or buildings used for agricultural purposes; Land or buildings used for residential purposes; Land or buildings used for other purposes; and Vacant or unused land or buildings. Owners of the above types of land or buildings are therefore only required to pay 10% of the land and building tax normally owed for 2021. The royal decree follows the Ministry of Interior’s recent announcement of an extension for the payment of land and building tax in 2021, which will now be due by June 30, 2021 (extended from April 30, 2021). For more details on these measures, or on any aspect relating to Thailand’s land and building tax, please contact Chaiwat Keratisuthisathorn at [email protected] or +66 2056 5507.