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

March 2, 2020

Thailand’s New Transfer Pricing Disclosure Requirements

Subscribe to Updates
Informed Counsel

If your company has been doing business in Thailand, you might already be aware of the additional corporate tax reporting requirement for the accounting period for the 2019 fiscal year (FY2019), starting from January 1, 2019. Under the new requirements, companies with income of at least THB 200 million that transacted with related parties are now required to file a transfer pricing disclosure form with the Revenue Department (RD) upon filing the annual corporate income tax return, called a PND.50. This new two-page form is the Transfer Pricing Disclosure Form.

The aim of this article is to help you understand whether your company is required to file the disclosure form, and, if so, the correct way to complete and file it.

Who Has to File the Disclosure Form?

1.  Companies with at least THB 200 million of income in FY2019

This THB 200 million threshold refers to the total income presented on your company’s audited financial statements for FY2019, not just the income from sales or services without regard to other income. Also, this should not be confused with the total taxable income on your company’s PND.50, which might be unequal to the company’s total income on financial statements.

2.  Companies that transacted with a “related party” during the accounting period

Under section 71 bis of the Revenue Code, two or more companies or juristic partnerships are considered “related parties” under the following circumstances:

  1. They hold shares in another entity, whether directly or indirectly, of at least 50 percent of that entity’s total share capital.
  2. The same shareholder holds shares in each entity, whether directly or indirectly, amounting to at least 50 percent of the total share capital.
  3. They are related in terms of capital, management, or control that makes one entity unable to operate independently from the other, as prescribed by ministerial regulation.

For FY2019, companies can only be considered related parties due to share capital (i.e., the first two rules listed above). The RD has not yet issued a ministerial regulation to further define the entities classified under rule 3. Therefore, for now, there is no need to take action if your company is only related to another company because of the capital, management, or control.

Parties related by shares under rules 1 and 2 seem to be simple to identify. However, the phrase “whether directly or indirectly” makes things a bit more complex. This phrase means you have to know the whole shareholding structure and percentage all the way up to the ultimate parent-company level, regardless of whether it is in Thailand. If your company is the one holding at least 50% of the total share capital in another company (i.e., your company is the parent company), you will have to know what, and how much, each subsidiary holds. This phrase also requires you to know your company’s vertical relationships with other companies. The chart below illustrates this principle, as described in related-party rules 1 and 2.

In this scenario, during FY2019, Company A provided services to Company B, resulting in the total income of Company A crossing the THB 200 million threshold. Company A and Company B do not hold any shares in each other, but they are considered related parties, because of Company D.

The shareholding structure makes Company D a related party of all three of the other companies under rule 1—by Company D’s direct share ownership of Companies B and C, and by its indirect share ownership of Company A. As a result of this indirect share ownership, Company A and Company B are related parties under rule 2. If the total income of Company B was less than THB 200 million, then only Company A would have to file the disclosure form. However, on the disclosure form, Company A would have to report all three companies (Companies B, C, and D) as related parties, even though none of these three entities are required to file their own disclosure form in FY2019, including the value and type of transactions that Company A had with the three related parties.

How to Complete the Disclosure Form   

Information about transactions between related parties could expose many tax and transfer pricing issues.

The RD would like to see the value of ten transaction types occurring during the year with each related party. This means that your accounting team will likely have a lot of additional work.

For instance, the disclosure form asks for the cost of raw materials and products purchased from related parties during the year. If you purchased raw materials or products from one related party, that would seem straightforward. However, the number that the RD wants to see is the expenses incurred during that particular year only. The cost of goods or services on your company’s accounts would normally also carry the cost from the previous year.

Therefore, your accounting team cannot simply lift the accounting sum to fill in the disclosure form. The number will need to be adjusted to reflect the shorter time period.

Another example is the disclosure form asking for the amount of royalty fees that the company actually paid during the year—generally meaning royalties paid under section 40(3) of the Thai Revenue Code (e.g., licensing fees, copyright fees, etc.). However, if your company paid rental to related parties overseas, that rental may be considered royalties as well under some double taxation agreements. Therefore, your accounting team will also need to know the relevant agreements and apply the withholding tax rate or value added tax correctly).

In addition to the amount disclosures, there are also checkbox questions to be completed.

How to File the Disclosure Form

Although the disclosure form has to be filed together with the PND.50, the disclosure form is currently not available for e-filing. In February 2020, the RD stated that they were working on implementing online filing for the disclosure form, but we anticipate that it may only become available shortly before the filing due date—May 29, 2020, if your company accounting period for 2019 was from January 1 to December 31.

It must also be noted that, even if e-filing becomes an option for filing the disclosure form, there is currently no law to allow extension of the filing due date for an additional eight days, as there is for the filing of other tax returns. The RD would have to issue a new law to extend the due date for online filing of the disclosure form. The Notification of the Ministry of Finance Concerning the Due Date Extension for e-Tax Filings and Payments, issued on January 28, 2019, does not cover the filing of the disclosure form.

Impact

Although the disclosure form is meant to be a tool for transfer pricing risk assessment purposes and not for tax assessment, there are financial liabilities for noncompliance. The fine for not filing, or reporting incorrect information without a justifiable reason, is THB 200,000 (approx. USD 6,425), whereas the fine for not filing the PND.50 on time is only THB 2,000 (approx. USD 64). The hefty fine will be imposed regardless of whether the violating company pays millions in corporate income tax or had no tax shortfall at all. Therefore, prudent business owners must consider their company’s filing requirements carefully—both whether they are required to file the disclosure form, and, if so, what information must be disclosed.

Download Full Article
Related Professionals

Practices

Tax

Location

RELATED INSIGHTS​ 

July 7, 2025
On June 20, 2025, Cambodia’s Ministry of Economy and Finance issued Instruction No. 19116 to clarify when board members and company directors must receive salaries and pay payroll taxes. Board members and company directors who are not considered employees are subject to a withholding tax. This category consists of people who complete services for a nonresident individual and people who perform independent work for a company in Cambodia. Board members and company directors who are considered employees, including those appointed by a foreign head office to temporarily manage a company in Cambodia, must pay payroll taxes on any salary they receive, regardless of whether they are paid by a local or foreign branch of the company. The above obligations apply regardless of whether the person has a work permit. Board members and company directors are exempt from paying payroll tax if they: Are not present and not performing a regular management role at the company despite being registered on the company’s statutes or patent tax card; Participate only in board meetings and occasional shareholder meetings; and Do not receive a salary from a company in Cambodia. Overall, this instruction provides an important clarification regarding the tax obligations of board members and company directors. Companies should pay attention to the classification of their board members and directors and be mindful of the exemption.   This article was written with the assistance of Tilleke & Gibbins interns Amelia Gemma Erickson and Amrin Keat.
Read More
July 2, 2025
On June 17, 2025, Cambodia’s Ministry of Economy and Finance issued Instruction No. 18574 on Tax Obligations for Share Premiums to clarify that enterprises are not required to pay any income tax on share premiums that meet the conditions set out in the instruction. As outlined in the relevant provisions of the Law on Taxation (Royal Kram No. NS/RKM/0523/004) and Prakas No. 578 MEF.PrK.GDT on Tax on Income, taxable income is the difference between an asset’s value at the beginning and end of a period. This calculation deducts capital contributions, which are not taxable. A share premium is the amount of money that a company receives in excess of the par value of a share when the company issues new shares to a shareholder through a share subscription. In other words, share premiums are capital contributions made by shareholders into the equity of the company and, as a result, are not taxable. However, the government may nevertheless view share premiums as taxable if the company fails to meet certain legal conditions. Cambodian law requires share subscriptions to be properly recorded in the company’s accounting books and supported by documentary evidence. The recent instruction states that if an enterprise does not have proper documentation, any increase in equity, such as a capital increase through share premiums, will be treated as taxable income in accordance with the law. The instruction provides the following example: Enterprise A issues 200,000 new shares to an investor. The shares were registered with a par value of KHR 4,000 per share and were sold for a sale price of KHR 10,000 per share. The share premium of KHR 1.2 billion, which is calculated by subtracting the total par value (KHR 800 million) from the total value of the new capital (KHR 2 billion), is a capital
Read More
June 11, 2025
Thailand’s tax dispute resolution framework has undergone a significant transformation with the enactment of the Act Establishing the Tax Court and the Procedure for Tax Cases (No. 3) B.E. 2568. Published in the Government Gazette on May 27, 2025, the amended act will come into force on November 24, 2025, which is 180 days after its publication. The amended act marks a pivotal shift in the jurisdiction and procedures of the Tax Court, most notably by empowering it to adjudicate certain criminal tax cases for the first time. Background and Rationale The Tax Court was originally established in 1985 as a specialized forum to handle complex tax disputes, including those related to revenue, customs, and excise taxes. The creation of the Tax Court recognized the need for judicial expertise in tax law, given its technical and specialized nature. The latest amendment is designed to address procedural inefficiencies, modernize court processes, and align Thailand’s tax litigation system with international standards. The reform demonstrates Thailand’s commitment to enhancing the efficiency, transparency, and fairness of its tax dispute resolution mechanisms. Key Amendments and Provisions Six of the key changes in the amendment are highlighted below. Expansion of jurisdiction to criminal tax cases. The most significant change is the extension of the Tax Court’s jurisdiction to include criminal offenses under the Revenue Code, customs law, excise tax law, and other tax-related laws that may be specified by royal decree. New sections in the act explicitly grant the Tax Court authority to hear and decide criminal tax cases, so individuals and entities accused of criminal tax evasion or other tax-related crimes will now have their cases heard by judges with specialized tax expertise. The law also clarifies the Tax Court’s jurisdiction when a single act constitutes multiple offenses (some tax-related, some not) or when
Read More
June 3, 2025
On March 12, 2025, Cambodia’s Ministry of Economy and Finance issued Prakas No. 192 on Tax Rules and Procedures for Trust to determine the tax rules and procedures for trust operations. With the exception of trusts whose legal form is a company or enterprise, all trustors, trustees, and beneficiaries engaged in trust operations in Cambodia are subject to this new regulation. Taxpayer Registration A trustee company must register as a medium or large taxpayer. An independent individual trustee must register as a small, medium, or large taxpayer depending on the amount of turnover or the value of the fixed assets of the business, as stipulated in the Prakas on the Clarification of Taxpayers under the Self-Assessment Regime. Independent individual trustees must register as taxpayers within 15 working days from the commencement of economic activity or from the receipt of a license or authorization from the Trust Regulator. Accounting Records Accounting records should follow the rules stipulated in Article 6 of the Law on Taxation., which requires small taxpayers to use simplified accounting, while medium and large taxpayers must adhere to the Cambodian International Financial Reporting Standards (CIFRS).The trustee must maintain separate accounting records between its own operations and the trust. If the trustee manages more than one trust, the trustee must prepare separate records for each trust. For all the records, the trustee must clearly identify the ownership of all assets, liabilities, expenses, and other transactions. Taxation of Trustee’s Income Trust property or funds that are transferred to a trustee for management are not considered income or property of the trustee. However, any allowances or commissions that the trustee receives from managing the trust are taxed as income. The trustee must follow the general rules on expenses outlined under Cambodian tax law to record all income and expenses related
Read More