Overview of Mandatory Tp-Related Reporting
Under the Revenue Code (RC) of Thailand and relevant rules, juristic persons meeting certain criteria are required to submit one or more of the following documents to the Revenue Department (RD). Juristic persons include private limited companies and permanent establishments (PEs) of foreign entities conducting business in Thailand.
1. RELATED PARTY DISCLOSURE FORM
Large companies (i.e., those with an annual revenue of THB 200,000,000 or more) with related companies[1] are required to submit an annual corporate income tax return (CIT) and “Annual Disclosure Form for Companies or Juristic Partnerships with Related Parties per Section 71 bis of the Revenue Code” (Related Party Disclosure Form). Information concerning the related parties and transaction amounts must be included in the Related Party Disclosure Form. Failure to properly file this form may result in a fine not exceeding THB 200,000 (two hundred thousand).
2. LOCAL FILE[2]
Companies required to file the Related Party Disclosure Form may receive a notice from the RD to submit “…documents or evidence showing information necessary for analysis of the conditions of transactions between companies or juristic partnerships that have relationships with each other […]”. This collection of evidence is referred to as a Local File. If a company receives such notice, it must generally submit the Local File within 60 days of receipt. The Local Files required by the RD are a near-equivalent[3] of what the Organization for Economic Co-operation and Development (OECD) also refers to as a local file. Failure to properly file this form may result in a fine not exceeding THB 200,000 (two hundred thousand).
3. COUNTRTY-BY-COUNTRY (CbC) REPORT
Thai CbC Report requirements are in accordance with the Country-by-Country Reporting XML Schema as prescribed by the OECD. The required information is listed in Appendix IV. CbC Reports must[4] be submitted to the RD together with a Thai CIT (Form PND 50) if:
a. The consolidated group revenue in the relevant accounting period equals THB 28 billion (28,000,000,000) or more; and
b. The RD is unable to obtain a CbC Report through other channels, such as under an international data exchange agreement.
There are no penalty provisions related to the submission of CbC Reports.
The Forms in Detail
More detailed descriptions of these three document types are included below.
1. RELATED PARTY DISCLOSURE FORM
Companies which conduct business in Thailand (including permanent establishments of foreign entities) are required to submit this form together with a CIT if:
a. The company had an annual revenue of THB 200,000,000 (two hundred million) or more[5]; and
b. The company had a related party during the relevant tax year.
2. LOCAL FILE
Companies meeting both of the following descriptions may be instructed to submit a Local File:
a. If the Company had annual revenue of THB 200,000,000 (two hundred million) or more[6], and
b. If the Company had a related party during the relevant tax year.
3. COUNTRY-BY-COUNTRY REPORTING
International businesses that are tax residents (or have PEs) in two or more countries and have a company in Thailand, or conduct business in Thailand, are required to submit a CbC Report together with its CIT (Form PND 50) if the RD is not able to obtain a CbC Report by other means in a timely manner (e.g., Through an international data exchange agreement with another country, in which the ultimate[7] company in that country has submitted a CbC Report in that other country.)
Examples of Related Parties
How Can We Help?
Our expert team of tax professionals is intimately familiar with global transfer pricing best practices. They assist in evaluating transactions and performing risk analyses, devising strategies drafting master files to ensure compliance with all applicable regulations. Our services include designing the work plan, creating risk assessment matrixes, conducting analyses for transaction economic support, drafting the master file or Transfer Pricing and local file reports, and designing the protocol to establish the use of reports.
Notes:
[1] “Related companies or juristic partnerships” is defined under the RC, in Section 71 bis, paragraph 2 as follows:
“Companies or juristic partnerships that have relationships with each other under paragraph one refers to companies or juristic partnerships from two juristic persons upwards that have relationships with each other in the following descriptions:
(1) A juristic person holds shares in or is a partner of another juristic person, either directly or indirectly, at not less than fifty percent of the total capital.
(2) Shareholders or partners holding shares or being a partner in another juristic person, either directly or indirectly, at not less than fifty percent of the total capital, that hold shares or are a partner in another juristic person, either directly or indirectly, at not less than fifty percent of the total capital, or
(3) Juristic persons with relationships with each other in respect of capital, management, or control in a description that a juristic person may not operate business independently from another juristic person as prescribed in Ministerial Regulations.”
[2] Here, “Local File” refers to what is referred to in RC, Section 71 ter, paragraph two, as “documents or evidence showing information necessary for analysis of the circumstances of transactions between companies or juristic partnerships that have relationships with each other”. (Relevant rules do not exactly use the term “Local File”.)
[3] Notice of the DG of the RD relating to Income Tax (No. 407) specifies the required information.
[4] Such submission requirement arises under “Notice of the Director-General of the RD – Relating to Income Tax (No. 408) – Re Persons Filing Returns to File Country-by-Country Reports”
[5] Source: Ministerial Regulations No. 370
[6] Source: Ministerial Regulations No. 370
[7] The DG Notification (No 408), Section 1, defines “Ultimate Company” as “A company or a juristic partnership that has control, directly or indirectly, in other companies […]”.