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?"

Currently, Transfer Pricing is nothing new in the Thai business circle. Executives, financial professionals, accountants, and others have become quite familiar with and understand Transfer Pricing. However, starting a series on Transfer Pricing by answering the simple yet important question, "What is Transfer Pricing?" could help everyone understand the concept clearly. It's like buttoning a shirt; if you get the first button right, the rest will follow correctly.