Foreign e-service providers liable to VAT in Thailand starting 1 September 2021

HLB Thailand Tax Services Team

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Starting from September this year, foreign e-commerce businesses will be liable for 7% VAT on services provided to customers in Thailand. In addition to boosting VAT collections, the law aims to create a level playing field for domestic and foreign operators providing services online to Thai customers.

E-service businesses expected to be affected include:

  • Online hotel reservations
  • Subscription to online movies, music, and e-books
  • Online gaming services
  • Online advertising
  • Sticker downloads
  • Websites, applications, and online market places
  • Online streaming

Popular foreign online platforms expected to be affected include Apple, Google, Facebook, Netflix, Line, YouTube, Tiktok, etc.

The Thai Government expects to generate annual revenue of Baht 5 billion from this measure.

Background

The amendments to the Revenue Code to impose VAT on foreign e-services are contained in The Revenue Code Amendment Act (No.53) B.E. 2564.

The key principles remain the same as the draft law issued last year (see our article dated 23 September 2020).

When the e-services tax becomes effective on 1 September 2021, the onus for paying VAT on e-services from abroad, which previously rested under the law with consumers, will shift to the foreign e-service providers.

The Revenue Department has aimed to develop taxation practices in line with international standards set by the Organization for Economic Cooperation and Development (“OECD”), with more than 60 countries including Australia, New Zealand, Japan, Taiwan, and South Korea already adopting similar practices in accordance with the OECD’s recommendations.

Key amendments

The definition of the term “Goods” under section 77/1(9) of Revenue Code has been amended to exclude intangible assets delivered through the internet or any other electronic network i.e. electronic services.

Electronic Services and Electronic platforms are defined as follows:

“Electronic Services” means services including intangible assets delivered via the internet or any other electronic network and the nature of which renders their service essentially automated and impossible to ensure in the absence of information technology.

“Electronic platforms” means a market, channel, or any other process used by multiple service providers to provide electronic services to customers.

Foreign e-services providers will be required to register to pay VAT if they derive revenues over THB 1.8 million in a year from e-services provides to customers in Thailand that are no VAT registrants e.g. individual consumers.

Persons liable to remit VAT are divides into two categories:

  • Foreign e-service providers providing services from abroad to non-VAT registered customers that use such services in Thailand.
  • Electronic platform owners, who are liable to VAT instead of the foreign suppliers operating on their platform, providing services electronically to non-VAT registered customers that use such services in Thailand.

E-service providers who fall under the above criteria are required to register for VAT and remit VAT every month, similar to domestic businesses. However, such e-service providers are prohibited to issue tax invoices.

This will be a “pay-only” system meaning that service providers will be liable to VAT on revenues but cannot offset VAT paid on expenditures.

To facilitate taxpayers, the VAT processes such as registration, return filing, and payment can be performed electronically through the Revenue Department’s Simplified VAT System for e-Service (“SVE”) online platform.

Revenue Department enforcement procedures

The Thai Revenue Department will enforce the new law through various measures, including:

  • Requesting information concerning financial transactions of e-service operators from taxpayers and/or financial institutions.
  • Social sanctions by providing the lists of VAT registered e-business operators on its website for the public to investigate and report non-compliance to the Revenue Department.
  • Exchange of information for tax purposes with other countries using Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC) and the Automatic Exchange of Information portal (AEOI).

Supplementary regulations and information guides are expected to be issued by The Revenue Department in the coming months to provide further details on the implementation of VAT on foreign e-services. Click here for the latest guide in English which provides detailed information about VAT on electronic services provided to non-VAT registrants in Thailand by non-resident service providers.

Read an English translation of the Amendment Act

Rohit Sharma

Principal, Transfer Pricing

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Transfer Pricing documentation and adjustment rules clarified

HLB Thailand Transfer Pricing Team

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The Director-General of Thailand’s Revenue Department has released an important notification on transfer pricing, laying down the rules, procedures, and conditions to be followed by tax assessment officers when inspecting the pricing of related party transactions and determining any adjustments to be made.

The notification, formally known as “Notification of the Director-General of the Revenue Department on Income Tax (No.400)”, provides further clarity for taxpayers about the transfer pricing documentation that they are expected to maintain. It is effective for accounting periods commencing on or after 1 January 2021.

The release of the notification is a welcome move and indicates the intention of the Revenue Department to make Thailand’s Transfer Pricing laws consistent with the OECD Transfer Pricing Guidelines, with the ultimate objective of create a level playing field for all taxpayers and curbing profit shifting practices.

Adjustment of controlled transactions

Transactions between related parties – referred to as controlled transactions – shall be compared with comparable uncontrolled transactions between independent parties.

A tax assessment officer shall have the power to adjust the income and expenses of a taxpayer if the remuneration of a controlled transaction is different from the remuneration for a comparable uncontrolled transaction.

Comparable uncontrolled transactions

Controlled and uncontrolled transactions are comparable if none of the differences between the transactions could materially affect the factors being examined or if appropriate adjustments can be made to eliminate the material effects of any such differences.

According to a ministerial regulation issued in 2020, tax assessment officers shall first consider similar transactions that the taxpayer has made with third parties – internal comparables – if they are available.

In assessing the degree of comparability between controlled and uncontrolled transactions, the notification provides that the following factors shall be taken into account:

  1. Contractual terms
  2. Functions, Assets, Risks
  3. Characteristics of the property or service transferred
  4. Economic circumstances
  5. Business strategies pursued

Acceptable transfer pricing methods

Consistent with the OECD’s Transfer Pricing Guidelines the notification recognizes five acceptable Transfer Pricing methods:

  1. Comparable Uncontrolled Price (CUP) Method
  2. Resale Price Method (RPM)
  3. Cost Plus Method (CPM)
  4. Transactional Net Margin Method (TNMM)
  5. Profit Split Method (PSM)

Like the OECD’s Transfer Pricing Guidelines, there is no hierarchy recommended for selecting a method. The most appropriate method shall be used, after consideration of the methods’ strengths and weaknesses, appropriateness for the controlled transaction, availability of reliable information, and degree of comparability.

A taxpayer may use a method that is not one of the five acceptable methods, but only if they have assessed that the five acceptable methods cannot be used and that the other method selected is the most appropriate method. The taxpayer will need to notify the Director-General of the Revenue Department in writing in the year that the method is applied and explain the method used and why the five acceptable methods cannot be used, together with supporting documentation and evidence, for examination by a tax assessment officer.

Two or more transactions, which are so interlinked that they cannot be analyzed separately, should be aggregated and tested together under the most appropriate Transfer Pricing method. This approach generally applies to margin-based analysis such as RPM, CPM, TNMM.

Adjustment approach

Adjustment to the income or expenses in relation to a controlled transaction can be made by a tax assessment officer if the compensation receivable for the transaction is outside the interquartile range. However, the notification is silent on the point of adjustment, e.g., lower quartile, median, upper quartile, or whether anywhere in the interquartile range could be considered arm’s length (to find out more, read our insights on year-end adjustments).

Service transactions

Where the controlled transaction is for services, the compensation received shall be regarded as compensation received from an independent transaction if the following conditions are met:

  • The compensation is for services actually performed.
  • The service is beneficial or expected to be of economic or commercial benefit to the service recipient.
  • It is a service that an independent company under comparable circumstances would pay to receive services from an unrelated company, or in order to have that service performed by its own internal departments.
  • The compensation is the same as the compensation that would have been determined if dealing independently for comparable services.

Compensation for service transactions that is for the benefit of shareholder ownership shall not be considered compensation that would be required if acting independently.

This is consistent with the OECD Transfer Pricing Guidelines, which provides that shareholder activity would not be considered to be an intra-group service, and thus would not justify a charge to other group members.

Intangibles

In the event that the controlled transaction involves intangible property, the following issues should be taken into account when consider the compensation for the transaction:

  • In the case of exploitation of intangible property, the duties that each contracting party is responsible for in respect of the development, improvement, maintenance, protection and the exploitation of the intangibles, by taking into account the assets used and the risks accepted.
  • In the case of granting the right to use, sell or transfer intangible property, the benefits expected to be received, geographic restrictions, unique or non-exclusive features and the right to participate in the development of the intangible property.

Corresponding adjustments

If a tax assessment officer adjusts the income or expenses of a controlled transaction of one party, the officer has the power to make corresponding adjustments of the income or expenses of the counterparty to the transaction.

The first party must have accepted and paid the tax arising as a result of the adjustment or if it raised an objection, the matter must have been decided on appeal or by a court judgement and the party has accepted to pay the tax according to the judgement. Furthermore, the counterparty should not have concealed or given false information about the controlled transaction.

Adjustments should be made in accordance with the provisions of Thailand’s Double Tax Agreements if applicable.

Advance Pricing Agreements

For the benefit of avoiding double taxation under the double tax agreements that Thailand has made with other countries and to prevent transfer pricing disputes in the future, a Thai company transacting with related parties overseas can submit a request for an advance pricing agreement, for the determination of transfer prices over a fixed period of time in the future.

Rohit Sharma

Principal, Transfer Pricing

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Online filing of Transfer Pricing disclosure forms now mandatory

HLB Thailand Transfer Pricing Team

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The Director-General of the Revenue Department has issued a notification making it mandatory for companies to submit their transfer pricing disclosure forms online unless they have reasonable grounds for filing a paper form.

The notification was issued on on 14 January and is effective for accounting periods commencing on or after 1 January 2020.  Many companies in Thailand adopt a 31 December year end, and will need to follow the notification when filing a disclosure form for the 31 December 2020 year.

Only companies with Baht 200 million (USD 6.7M) or more in revenues in an accounting period must file the disclosure form with the Revenue Department, disclosing details of their related parties and transactions during the year with related parties.

Companies must register to submit the form online. Registration and filing of the form must be done through the Revenue Department’s website, either directly or via the Ministry of Finance’s “Tax Single Sign On” system.

The form will be considered submitted upon receiving the reference number from the online filing system.

If a disclosure form is filed by paper it must be accompanied by a letter explaining the reasons why the company cannot submit the form online.

Compulsory online filing of transfer pricing forms will greatly enhance the Revenue Department’s ability to review and analyse the information disclosed in the forms, and assist in the selection of taxpayers for transfer pricing audits.

Read the official notification in Thai language

Rohit Sharma

Principal, Transfer Pricing

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February 2021 Thailand Tax Update

HLB Thailand Tax Team

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The Thai government continues to monitor the financial impact of the pandemic on the country’s economy and has announced several new tax concessions in response.

 Extended deadline for e-filing of WHT and VAT returns

 Monthly WHT returns and VAT returns filed electronically are normally due for filing within the 15th and 23rd of the next month respectfully.

 For monthly WHT returns and VAT returns filed electronically, which are normally due for filing during the months of February 2021 to June 2021, the filing date has been extended to the last day of the month.

 This extension therefore applies to withholding tax returns (PND 1, PND 2, PND 3, PND53) and VAT returns (Por Por 30 and Por Por 36) for the tax months of January 2021 to May 2021.

Extended deadline for e-filing of 2020 personal income tax returns

The deadline for filing personal income tax returns (PND 90 and PND91) electronically for the 2020 tax year has been extended to 30 June 2021. The deadline for filing a paper return has not been extended and remains 31 March 2021.

Social Security Contribution rate for employees reduced to 0.5%

Monthly contribution rates were reduced at the beginning of the year from 5% to 3% for both employers and employees for 3 months from January to March 2021.

A reduced contribution rate of 0.5% has now been announced for employees only for February and March 2021.

The monthly wage base for contributions ranges from Baht 1,650 to a maximum of Baht 15,000 for each employee. The maximum contribution for February and March 2021 for an employee will therefore be reduced to Baht 450 per month for the employer and to Baht 75 per month for the employee.

Land and building tax reduced by 90% 

Land and building tax payable for the 2021 year has been reduced by 90%. Land and building tax was also reduced by 90% last year due to the pandemic.

Property registration fees reduced to 0.01%         

The Thai Cabinet has approved another reduction of registration fees for the purchase of new residential properties from developers.

 The 2% transfer registration fee and the 1% mortgage registration fee will both be reduced to 0.01%, effective from 3 February 2021 to 31 December 2021. A similar fee reduction had expired on 24 December 2020.

 The mortgage must be registered at the same time as the transfer and the price and the mortgage must both not exceed Baht 3 million.

Duangnetr Sarachai

Principal, Tax & Legal Services

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Radapak Arthapridi

Principal, Tax & Legal Services

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Transfer Pricing Terminology Broken Down and Explained

HLB Thailand Transfer Pricing Team

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At HLB Thailand, we want Transfer Pricing to be accessible to everyone. We understand that it’s easy to get lost in the jargon, so we’ve put together this easy to search glossary to lend a hand.

It is by no means exhaustive, but it’s a convenient place to start your Transfer Pricing journey. If you’re going to deal with transfer pricing, these are the 30 or so terms you’re going to need to know.

Anti-abuse rules and Anti-avoidance laws

These are some of the domestic taxation laws that you might run afoul of if you get transfer pricing wrong – they’re specifically aimed at ensuring people within a tax jurisdiction are paying the right amount of tax on their business profits as well as with punishing those who attempt to evade or reduce their tax contributions.

Arm’s Length Principle

The Arm’s Length Principle is an international standard set out by the OECD. It’s used for determining transfer prices and ensuring that controlled transactions are made at “arm’s length”. It ensures transfer prices between related parties are equivalent to prices unrelated parties would charge in the same or similar circumstances. This involves identifying situations or transactions undertaken by unrelated parties that are comparable to the situations or transactions between related parties. Many countries have addressed Transfer Pricing risks by introducing domestic rules based on the Arm’s Length Principle.

Arm’s Length Range

This is the range of financial figures used to establish whether or not the Arm’s Length principle has been met. Arm’s Length Ranges are generated by looking at the comparable Arm’s Length data. You’ll need to make sure that your particular Transfer Pricing method produces a result that lands within the Arm’s Length Range. We’ll look into the various Transfer Pricing methods you might use in just a bit.

The Arm's Length Range is used to justify a transfer price.

Associated/Related enterprises, companies, or parties

These terms are commonly used for companies who share ownership and/or common management control and would be subject to transfer pricing rules if they transact with one another. 

In Thailand, the Transfer Pricing laws state that two companies are considered related parties if:

1. One entity holds shares in or is a partner of the other entity, either directly or indirectly, of not less than 50
percent of the other entity’s total capital;

2. A shareholder that holds shares, either directly or indirectly, of not less than 50 percent of the entity’s total
capital, holds shares in another entity, either directly or indirectly, of not less than 50 percent of the entity’s
total capital; or

3. Entities are related in the capital, management, or control so that an entity may not operate independently
from the other entity, as prescribed by Ministerial Regulations. 

Related parties must deal with each other at Arm’s Length and their transactions are subject to Thai Transfer Pricing legislation.

Independent enterprises

These are transactions that occur between two related companies or entities. If you’re selling goods to a company that you own 50 percent or more of the shares in, that’s a controlled transaction. , so-called because you’re able to assert more control over the prices agreed than you would if you didn’t own a majority stake in the other company.

Controlled transactions

These are transactions that occur between two related companies or entities. If you’re selling goods to a company that you own 50 percent or more of the shares in, that’s a controlled transaction. , so-called because you’re able to assert more control over the prices agreed than you would if you didn’t own a majority stake in the other company. 

Uncontrolled transactions

These are transactions that occur between unrelated companies and which are therefore not subject to Transfer Pricing regulations. 

Functional analysis

Functional analysis is a breakdown of the critical functions, use of assets and assumption of risks undertaken by all related businesses involved in a controlled transaction. These can then be compared against similar figures from uncontrolled transactions with independent enterprises – again, it’s all about proving that you’ve followed the Arm’s Length Principle.

Functional analysis is a key part of comparability analysis and is the foundation of all Transfer Pricing analysis as a whole. The OECD Transfer Pricing Guidelines consider the assumption of risks to be a crucial part of the functional analysis, as the assumption of greater risks carries the expectation of greater profits.

Benchmarking

This is how you assess whether your controlled transactions are being priced fairly. A scientific methodology is required to arrive at the most suitable comparable companies to serve as benchmarks. Thailand prefers you benchmark your transfer prices against those of local companies – if you’re selling goods to a related company, how much would your related company be able to buy those goods for if they were purchasing from a local company rather than your own? This is benchmarking.

Benchmarking analysis is required to arrive at an arm's length range to justify the transfer price.

Comparability Analysis

This is how you go about making sure that your transfer prices are set at the going market rate. By comparing the controlled transactions your company is involved in with legally comparable uncontrolled transactions, you’ll be able to see if you’ve applied the Arm’s Length Principle correctly. You’re likely to encounter at least a few complicating factors while running your analysis, so it’s best to consult an expert who can convincingly weigh them up against the going market rate.

Comparable companies

This is where you compare a controlled transaction with an uncontrolled one – but the two are only legally comparable if there are no factors that could conceivably be regarded as different. It’s simply a case of making sure that factors are taken into account when making the comparison, and this comparison could then be used to calculate a transfer price that meets the Arm’s Length Principle and keeps you on the right side of compliance. (see our article on Thailand clarifies rules for use of internal and external comparables to get more insights into this subject)

comparable companies

Berry ratio

The Berry ratio is a simple calculation used in Transfer Pricing to indicate whether or not a company is making a profit on its value-added activities. You can calculate your Berry ratio by dividing your gross profits by your operating expenses. This measurement is most applicable to service providers who can calculate the remuneration for value-added functions. Under the Berry ratio, the mark-up is applied to the operating expenses that represent the remuneration only for the value-added functions but excludes the cost of goods sold. Under the Berry ratio, the mark-up is applied to the operating expenses or value-added expenses representing the remuneration only for the value-added functions, excluding the cost of goods sold. The Berry ratio application is subjective, and you’ll need an expert to navigate you through its applicability to your business.  

CFC (Controlled Foreign Corporation)

A CFC is a subsidiary or related entity of a multinational corporate group that’s located in a foreign jurisdiction. Some countries have introduced CFC legislation into their tax laws designed to limit artificial deferral of tax by using offshore low taxed entities.

Year-end/Voluntary Adjustment

This adjustment is one your company would make before you file your tax returns. It’s basically where you report a transfer price from a controlled transaction your company has taken part in and adjust the price that was actually set in the transaction to one that the taxpayer – you – consider in line with the Arm’s Length Principle. (Refer to our article on Year-end transfer pricing adjustments and customs valuations to get more insight)

Intragroup or Intracompany service

This is the rendering of a service to a related company – one that you’ll need to make sure is paid or received at the same rate that an independent enterprise could have provided the same service for.

Direct Charge method

This is one of the many methods of charging for an intragroup service. The Direct Charge Method requires a clearly identified agreement outlining how the transaction will be conducted. Speak to us for more info on this. . (See our article where Thai Revenue Department mentioned what they want to see for service transactions transfer pricing documentation and adjustment rules clarified)

Direct Costs

Direct costs are associated with the production of goods or the rendering of a service – raw materials, equipment needed to process the raw materials, the paying of salaries to those producing the goods or providing services etc.

Indirect Charge Method

This is just another of the potential methods you can use to calculate the agreed price in an intragroup or intracompany transaction. Each transaction will have a preferred method, so speak to us directly for more info on which one to choose and how to make it work for you.

Indirect Costs

These are costs not directly related to the production of goods or the rendering of services. Indirect costs include overheads like the petrol used for delivery, repairs on vehicles or machinery, software updates and the like. 

Double Taxation Treaty

A double taxation treaty or agreement is made between two countries to ensure that enterprises operating in both tax jurisdictions won’t be taxed twice by two different regimes. Most double tax treaties incorporate the Arm’s Length Principle as a basis for allocating profits (and thus taxes) between associated enterprises.

Double Taxation Treaties are tax treaties which affect transfer pricing.

Intangibles 

An ‘intangible’ is something that belongs to a company but is not a physical or financial asset. They include things like intellectual property or organizational know-how. Intangibles generally fall into one of two groups, marketing intangibles and trade intangibles.

  1. Marketing intangibles are used in customer-facing business operations and include things like
    trademarks, trade names, customer lists and customer relationships.
  2. Trade intangibles have more to do with internal operations and include things like patents, know-how,
    designs and models used for the production of goods or the provision of services.

Whenever a company’s intangible assets are used for commercial purposes by another party, a royalty rate will be agreed upon, either as a fixed value or as a percentage (depending on the license agreement) of the revenue gained through their use.

Intentional Set-Off

An intentional set-off is when a related company benefits from the actions of another related company. In order for the benefits to be mutual, the parent company or the two related companies will agree to find a means of repaying the benefits in one form or another. Intentional set-offs can get messy so you’ll want to be sure that your documentation is in order to prove that everything is above board. More on intentional set-offs and incidental benefits can be found under Chapter VII, section B. 1.4 of the OECD’s BEPS Action Plan 13.

Multinational enterprise group (MNE group)

This is a group of multinational companies that all share a common owner or are controlled by the same legal entity despite operating in more than one country.

Read More: How Country-by-country reporting (CbCR) regulations are evolving in Thailand

Multinational enterprise (MNE)

This is a company operating in more than one country that belongs to a larger group or parent company.

Read More: What’s the difference between a Master file and a Local file?

OECD Transfer Pricing Guidelines

Published for the first time in 1995, the Organisation for Economic Co-operation and Development (OECD) has been the leading organization in developing global transfer pricing guidelines. Thailand is adopting very similar rules to the OECD’s, but because they are not exactly the same you’ll always want to consult a local specialist to ensure your documentation requirements have been met.

Transfer Pricing Adjustments

This is an adjustment made by a tax authority for revenues or expenses generated from controlled transactions that fail to satisfy the Arm’s Length Principle. Transfer Pricing adjustments can be applied to controlled transactions occurring within the same or multiple tax jurisdictions.

Can the Thai Revenue Department adjust the counterparty to the controlled transaction? Refer to our article on transfer pricing documentation and adjustment rules clarified to get more insight.

Repatriation of Funds

This is just the returning of profit to a related company if you’re found to deviate from the Arm’s Length Principle when carrying out a controlled transaction. The potential consequences for tax evasion are catastrophic, so it’s best to avoid them altogether.

Tested Party

A tested party refers to a participating related company in a controlled transaction – typically it’s used to refer to a company whose functions, risks and assets are the least complex in the transaction and whose data is easily available for analysis in the public domain.

Transfer Pricing

This is the price applied to transactions between related companies, including adjustments made to ensure that the price is similar to what would have been paid if the companies were entirely separate from one another.

Transfer pricing terminology - transfer pricing meaning

Read More: Everything you’ve ever wanted to know about Transfer Pricing in Thailand 

Transfer Pricing Methodologies

There are many methods you can use to calculate Transfer Pricing in accordance with the Arm’s Length Principle. These include:

Traditional Transaction Methods: The Comparable Uncontrolled Price (CUP) method, Resale Price Method (RPM) and the Cost Plus Method (CPM) are considered traditional transaction-focused methods for establishing the Arm’s Length Principle in Transfer Pricing.

  • Comparable Uncontrolled Price (CUP) Method: This method compares the price of goods or services in a controlled transaction against the price of similar goods or services in a similar uncontrolled transaction. The key here is comparability in terms of product, price, circumstances, location and terms and conditions of the arrangement.
  • Cost Plus Method: This method uses the costs incurred by the supplier of the goods or services in a controlled transaction to determine an appropriate transfer price. This method requires you to add a mark-up on the costs to determine an appropriate profit in light of the functions performed and risks assumed. You’ll need to be sure you’ve taken functions and risks as well as current market conditions into account. Once you’ve added the mark-up on the costs, you should have a transfer price in line with the Arm’s Length Principle.
  • Resale Price Method: This method looks at how much a product could be resold to an independent company after it has been purchased from a related company in a controlled transaction. The resale price is reduced by the resale price margin. What is left after subtracting the resale price margin can be regarded, after adjustment for other costs associated with the purchase of the product (e.g. custom duties), as the arm’s length price of the original transfer of property between the associated enterprises. This is based on the gross margin realised in comparable uncontrolled transactions. This method is generally used for pure distributors that resell products without physically altering them or adding substantial value to them.

There are various factors or deficiencies in the application of CUP, CPM, or RPM – you’ll need an expert to help you select the most appropriate method to analyse the controlled transaction.

Transactional Profit Method:  Profit Split Method (PSM) and Transactional Net Margin Method (TNMM) are considered traditional profit-focused methods for establishing the Arm’s Length Principle in Transfer Pricing.

  • Profit Split Method: This method looks at how profits ought to be split in a controlled transaction. The goal is to produce the approximate division of profits that would have been found following a transaction that meets Arm’s Length standards. The approximate division is based on combined profits derived by the counterparties to the transaction. This method is mostly used in highly-integrated or complex controlled transactions involving the creation of an intangible asset.
  • Transactional Net Margin Method: The TNMM examines the net profit that a company derives from a controlled transaction relative to an appropriate base (e.g., costs, sales, or assets). Typically, TNMM is used as financial data on comparable independent companies that are commonly publicly available. Moreover, TNMM is also more tolerant of accounting inconsistencies. Its use of net operating profit analysis, which naturally captures both cost of goods sold and operating expenses, allows for a more consistent comparison of financial results, albeit differing accounting treatments to cost classification.

Transfer Pricing Disclosure Form

In Thailand, the transfer pricing disclosure form is a report which includes details of related parties and transactions during the year with related parties. A company must file this form if its annual revenues are greater than THB 200 million. The form must be filed online on or before the corporate income tax return filing date. 

Read More: The impact of COVID-19 on your Transfer Pricing arrangements

HLB’s Transfer Pricing specialists are here to help. 

Thailand’s Transfer Pricing rules are complex, and can differ greatly from those in neighbouring countries. To stay compliant, book a meeting with Rohit Sharma and his team of local Transfer Pricing experts at HLB Thailand today. 

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