You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

November 25, 2021

Thailand Issues Country-by-Country Transfer Pricing Reporting Regulation

Subscribe to Updates

On September 30, 2021, Thailand’s Revenue Department released a notification prescribing country-by-country (CBC) transfer pricing reporting requirements for multinational enterprise (MNE) groups that do business in Thailand.

The Notification of the Director-General of the Revenue Department Re: Income Tax (No. 408) applies to accounting periods beginning on or after January 1, 2021, with the CBC report submitted at the same time as the annual corporate income tax (P.N.D. 50) filing (i.e., within 150 days of the end of the accounting period). For example, if the accounting period ends on December 31, 2021, the CBC report must be filed by May 30, 2022.

Background

The CBC report functions as part of a three-tier structure, together with a global master file and a local file, as recommended by the OECD’s Base Erosion and Profit Sharing (BEPS) Action 13 report (Transfer Pricing Documentation and Country-by-Country Reporting). The CBC reporting requirement targets large MNEs, with the aim of encouraging international tax transparency, improving tax authorities’ access to information on MNEs’ global allocation of income and taxes paid, and helping governments to assess high-level transfer pricing risks and conduct economic and statistical analysis.

The CBC reporting requirement will allow Thailand to exchange tax and financial information on an automatic basis with other signatories of the Multilateral Convention on Mutual Administrative Assistance on Tax Matters. This goes in tandem with the recently passed Act Amending the Revenue Code (No. 54) B.E. 2564 (2021), which empowers the director-general of the Revenue Department to exchange information with competent authorities in other jurisdictions.

Entities Required to Submit CBC Reports

The CBC report notification applies to MNE groups that do business in Thailand and at least one other jurisdiction and that have consolidated group revenue of at least THB 28 billion (approx. USD 847.6 million) in a 12-month accounting period (prorated for shorter periods).

Generally, ultimate parent entities (UPEs; see definitions below) incorporated in Thailand must submit a CBC report to the Revenue Department. For foreign UPEs (i.e., those not registered in Thailand), an MNE group member that operates in Thailand may have to file the report locally.

However, these Thai members of the MNE group will not have to submit the CBC report if the following conditions are met:

  • The foreign UPE already files a CBC report in its own tax residence; and
  • The tax residence of the foreign UPE has an effective CBC reporting competent authority agreement with Thailand, and CBC reports can be shared successfully with Thailand.

In addition, for the purposes of multijurisdictional exchange of information, a Thai member of an MNE group may be formally appointed by a foreign UPE as a Thai surrogate parent entity (SPE) to file the reports on its behalf. However, the accounting periods of the foreign UPE and the SPE must be the same, and the foreign UPE must notify the Revenue Department of the appointment of the SPE.

By formally appointing the SPE in Thailand, the MNE group may be exempt from CBC reporting requirements in other jurisdictions that have a competent authority agreement with Thailand under which CBC reports are exchanged. This is similar to the filing exemption (see below) offered by the Revenue Department.

Filing Exemptions
A Thai member of an MNE group mentioned above is exempt from filing CBC reports with the Revenue Department if all of the following conditions are met:

  • The foreign UPE has appointed an SPE residing outside Thailand (i.e., an SPE located in a third country) to file CBC reports with the competent authority of the third-country SPE’s country of tax residence;
  • The third-country SPE’s country of tax residence requires the filing of CBC reports;
  • A competent authority agreement between the third-country SPE’s country of tax residence and Thailand is in effect by the CBC report filing deadline in Thailand;
  • The third-country SPE’s country of tax residence has not reported a systemic failure regarding its information exchange to Thailand;
  • The third-country SPE has notified the competent authority in its country of tax residence of its appointment as a reporting entity; and
  • The Thai Member of the MNE group has notified the Revenue Department of the appointment of the third-country SPE.

Defining a UPE

The definition of UPE is generally based on the requirement to prepare consolidated financial statements. Under the CBC reporting notification, an entity is considered a UPE in either of the following scenarios:

  • It directly or indirectly owns enough of one or more other entities in the same MNE group that it has to prepare consolidated financial statements under accounting principles of its country of tax residence, or would have to if its equity interests were traded on a securities exchange in that country (or the Stock Exchange of Thailand if the country has no securities exchange). In addition, in order to be considered a UPE it cannot be directly or indirectly owned, in the above manner, by any other entity in the same MNE group.
  • It does not have an ownership interest (in the manner described above) in any other entity, but it conducts business through a permanent establishment in another country.
Related Professionals

Practices

Tax

Location

RELATED INSIGHTS​ 

March 21, 2023
Thailand has issued a royal decree officially reducing the land and building tax due in 2023. The Royal Decree on Land and Building Tax Reduction (No. 3) B.E. 2566 (2023), which was announced and published in Thailand’s Government Gazette on March 19, 2023, and came into effect the following day, will effectively reduce land and building tax payments by 15% in 2023 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 these types of land or buildings are therefore only required to pay 85% of the land and building tax normally owed for 2023. Furthermore, owners of certain types of land or buildings that were eligible for tax reduction of 50% or 90% under the Royal Decree on Land and Building Tax Reduction B.E. 2563 (2020) will enjoy an additional 15% reduction of the tax amount that was reduced by 50% or a continuation of the 90% tax reduction, depending on the circumstances. 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.
Read More
December 30, 2022
Thailand’s cabinet has approved draft legislation to impose a financial transactions tax (FTT) on securities trading in the Stock Exchange of Thailand (SET). The cabinet’s decision, which came on November 29, 2022, sets Thailand on a path to repeal a tax exemption that has been in place for over 30 years. If the legislation is ultimately passed, the FTT will be applied to transactions starting in April 2023. The sale of securities on the SET has been exempt from specific business tax (SBT) since December 1991 in an effort to promote trading on the secondary market and boost the domestic economy. The draft legislation approved by the cabinet in November 2022 aims to repeal the SBT exemption on securities trading on the SET and impose an FTT, which is a kind of SBT imposed on a specific commercial transaction. It is an indirect and transactional tax (similar to a sales tax) and is imposed on gross receipts, not on value added at each stage of manufacturing, trading, or service like VAT. Generally, securities sellers are the ones liable for FTT. However, the draft law stipulates that securities brokers are to withhold FTT from the gross share sales income and remit it to the Revenue Department on behalf of the securities seller within the 15th (or 23rd, depending on circumstances) day of the next month through the Revenue Department’s e-filing platform. Under this arrangement, securities sellers and investors do not have any duty to remit SBT, and sellers have no reporting obligations regarding sale transactions. Under the current draft, the imposition of FTT will be implemented in two phases, with an initial reduced rate as detailed in the table below. The securities subject to FTT include shares (both ordinary and preference), warrants, derivative warrants, exchange traded funds, depositary receipts, mutual
Read More
December 29, 2022
On December 20, 2022, Thailand’s cabinet approved draft legislation providing further Land and Building Tax reductions of 15% in 2023, on top of current reductions in tax rates, on some types of taxable property. When enacted, the legislation will provide further tax reductions only for the property types in the table below. Moreover, in early December, Thailand’s Ministry of Interior promulgated an announcement extending the deadline for tax assessment notification and tax payment (including by scheduled installments) by another two months from the previous statutory deadline of December 20, 2022. The key deadline extensions are shown in the table below. The Land and Building Tax is a property tax collected annually, with rates varying based on the purpose of use—agricultural, commercial, industrial, or residential. Owners or possessors of land or buildings are liable for Land and Building Tax, which is computed based on the officially appraised value of the property. For more information on Thailand’s Land and Building Tax, please contact Auaychai Sukawong at [email protected] or Chaiwat Keratisuthisathorn at [email protected].
Read More
December 28, 2022
Introduction This article provides a summary of Myanmar’s tax and tariff updates in 2022. Perhaps most prominent are the commercial tax, special goods tax, and tariff rate exemptions for battery electric vehicles (BEVs) and an increase in special commercial income tax for companies engaging in oil and gas exploration and production in Myanmar. This is good news for environmental protection efforts through taxation law. Additionally, Myanmar announced its updated Customs Tariff of Myanmar 2022, which covers internationally classified harmonized system (HS) codes and the HS codes of the ASEAN Harmonized Tariff Nomenclature. Furthermore, Myanmar’s Internal Revenue Department (IRD) also issued clarifications on tax avoidance, negligent underpayment of tax, misrepresentation of tax information, tax evasion, withholding tax on services, and tax refunds. Union Taxation Law 2022 and Amendment On March 30, 2022, the Union Taxation Law 2022 was enacted by the State Administration Council (SAC) with the SAC Law No. 6 of 2022; the law was further amended on November 17, 2022 by SAC Law No. 48 of 2022. The amended law exempts BEVs and their batteries from commercial tax and special goods tax, effective from October 1, 2022 to March 31, 2023. The amendment also provides that companies engaging in oil and gas exploration and production in Myanmar are subject to a special commercial income tax rate of 25% on their total net profit from April 1, 2022, to March 31, 2023. Tax Avoidance, Underpayment of Tax, Misrepresentation of Tax Information, and Tax Evasion The IRD issued a public ruling on November 16, 2022, to address tax avoidance, underpayment of tax, misrepresentation of tax information, and tax evasion. This public ruling was brought under the Tax Administration Law 2019 and concerns relevant provisions in that law. Tax avoidance is interpreted as occurring when a person who understands the tax
Read More