Apart from what has been discussed so far, there are still some frequently asked questions about the Disclosure Form. These are minor questions, but they are important because if missing them could lead to unnecessary expenses. I have compiled the answers to these questions here.

If a company has related companies (Related Co.), Thai transfer pricing law mandates two main responsibilities:

The note at the end of the Act amending the Revenue Code No. 47, B.E. 2561 explains the reasons for enforcing the transfer pricing law (which reflects the Revenue Department's attitude towards transfer pricing) that currently, large companies with capital, control, and management relationships "can transfer profits to avoid taxes" by setting prices, service fees, or interest rates differently from what should be set if operated independently. Therefore, specific laws on transfer pricing must be enacted (to deter?). So, Section 71 bis empowers officials to adjust income or expenses for tax assessment if transfer pricing is deemed non-arm’s length "in a manner that can be believed to transfer profits."

The Arm’s Length principle is a “tool” used by related companies to set and is a “ruler” to assess whether the transfer prices for transactions between them are correct and appropriate or not. The mechanism of this principle is as direct as its name. If two companies are very close that they are almost touching each other, push them out to “the end of an arm’s length” by way of setting the prices of goods, assets or services as if they were strangers, i.e. equal to the prices resulting from negotiations, or the so-called “market price”.

I got question from one of our FB friends – What is Pillar 2? To clearly explain Pillar 2 rules besides answering "what?", I should also address "why?", "how?", and "who?"