Since the heart of the Arm’s Length Principle is the comparison of prices of goods or services. In order to compare prices, we must first make sure that the product or service selected for comparison is the similar to the product or service for which the price is to be determined. This is why we need to conduct a Comparability Analysis—to check whether the goods or services are comparable.

Can the Revenue Officers still audit transfer pricing tax using general provisions?

Before we move on to the next topic, let’s briefly revisit the concept of related companies. One common question I received from foreign companies was “Whether the definition of a Related Company under Thai law was the same as that under the OECD Guidelines?” The answer is: “Almost the same.” The OECD Guidelines define "Associated Enterprises" in its Glossary as follows: “Two enterprises are associated enterprises if one of the enterprises meets the conditions of Article 9 sub-paragraphs 1(a) and 1(b) of the OECD Model Tax Convention,” which was broad conditions:

Now let us talk about the second question, which asks how to verify which companies are our related companies. This inquiry originates from individuals responsible for providing accounting and tax services to companies.  They must ensure that the companies comply with the law accurately and completely. Therefore, they need to know what methods and tools can be used to check companies that are related to our company or our clients.

In 2022, the Revenue Department sent letters to many companies requesting them to submit transfer pricing information in the form of a Disclosure Form for financial year 2020 (without any hints that "they would be liable to the fines"). This is because those companies had related companies but did not submit the form as required by law. However, the deadline for submitting the 2020 form was extended by one year, allowing companies to avoid fines. Nowadays the Officers continue to follow up with companies to submit the Disclosure Form as usual. However, the fines will no longer be waived. Therefore, companies need to know (1) which companies are related companies, and (2) how to verify the status.