Since 2020, the Revenue Department has gathered information from large companies that have related-party transactions through the disclosure forms. This information would be handy in helping them identify transfer pricing audit targets.
In 2024, the Revenue Officers openly revealed that they are preparing a handbook that provides guidance to tax auditors to efficiently conduct transfer pricing investigations and tax assessments.
Now, the real has come. Many multinational enterprises received from the area revenue offices the letters requesting for 18-item list of the required information within 60 or 180 days as the case may be. The list includes business profile, local organization chart with number of employees, value chain, business strategy, inter-company transactions and pricing policies, for example.
From the list, it is obvious that the responsible officers must tick whether the companies had submitted the required information in such item or not.
The list ended with a caveat that the tax authorities reserve the right to impose the fines (maximum Baht 200,000) if the information provided was incomplete or inadequate for auditing the transfer prices.
Author’s Note:
Take away from this new development at the Revenue Department was that:
1) Unlike the massive transfer pricing audits conducted in 1990s in which the transfer pricing information was reviewed by Transfer Pricing Team of the Large Business Tax Administration Division (with 20-30 headcounts). This time transfer pricing audits are under responsibility of tax auditors nationwide.
2) Though the letter listed out the required information item-by-item. Do not give the raw data and let the Officers fabricate the information by themselves. The information must be presented in the report form that sheds the most likeable light on the company.
3) The Baht 200,00 penalty for submitting incomplete or inadequate would be lenient if consider the far more critical issue if a company determines its transfer prices incorrectly under Section 71 bis of the Revenue Code as the tax liability could reach 3 times of the tax shortfalls.
[Contact Person: Mr. Phongnarin Ratarangsikul | Partner]