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Transfer Pricing in Thailand: What you need to know


In today’s business environment, multinational corporations often have operations spread across the world in order to improve capital efficiency. Transfer pricing refers to the prices charged by related group entities when transferring raw materials, products, intellectual property, and services with each other. Tax authorities are concerned that due to their relationship, such transactions may be conducted under terms and prices that do not reflect arm's length market transactions. For example, goods may be sold by a parent company in a high-tax country at artificially low, non-market prices to its subsidiary in a low-tax country. By doing so, income can be shifted to the low-tax country. Total tax paid by the group in the two countries would thus be reduced.

Transfer pricing requirements in a nutshell

To prevent income shifting among multinational group entities, many countries, including Thailand, have strict transfer pricing laws and regulations. In fact, transfer pricing has been an area of focus at the Thai Tax Revenue Department (TRD) since 2002. The 2002 transfer pricing guidance was strengthened with additional sections in the Thai Income Tax Act in 2018. The 2018 legislation and subsequent TRD Director General Notices detail a number of items that Thai taxpayers have to report and comply with in order to demonstrate that their transfer prices are at arm’s length and to avoid penalties. We have summarized these below:


  Transfer Pricing Documentation Disclosure Form
What is required? Documentation supporting the transfer price or profitability associated with related-party transactions.  Such documentation must be prepared in accordance with the information content and methodology specified in the TRD notices.

Information on:

-       domestic and offshore related parties (regardless of whether there were transactions with those parties); and

-       related-party transactions, including the nature and quantum thereof.

Who must prepare?

Thai companies or juristic partnerships that have a related party and income greater than THB 200 million in that accounting period.

When to prepare?
Up to 150 days from the end of the accounting period and thereafter, and within 60 days upon official request.

Up to 150 days from the end of the accounting period and filed with the tax return.



The information required inside the transfer pricing documentation is detailed and includes:

  • Taxpayer information – Taxpayer and group overview, group structure, local organization chart, value chain, business strategy, industry analysis, restructuring and intangible transfers (if any); and
  • Economic Analysis – Nature of related-party transactions, counterparty, amount, pricing policy, summary of agreements, functional and risk analysis, choice of transfer pricing method, benchmarking a transfer price or profitability range from arm's length observations, etc.


If a related-party transaction is not deemed to be conducted at arm's length, the TRD has the power to make an adjustment to the income and/or expense of the taxpayer concerned. Should this result in an increase to taxable income, besides paying the additional income tax, there may be a penalty of up to 200% on the amount underpaid, plus a capped surcharge of 1.5% per month on the amount of the shortfall (starting from the filing due date). Adjustments may be made to several open years, thereby potentially magnifying the foregoing penalty exposures by several-fold. 

The law also allows for a fine of up to THB 200,000 if the taxpayer has not complied with the related-party disclosure form and transfer pricing documentation requirements. A transfer pricing adjustment may result in withholding tax and VAT exposures.

How taxpayers should respond

The penalties for non-compliance and a wrong transfer price can be substantial. Many taxpayers have therefore responded with careful and market-tested transfer pricing planning to ensure that the remuneration provided to each related entity is commensurate with the economic value it has created. These taxpayers have also prepared transfer pricing documentation in accordance with the TRD’s expectation, to support the transfer prices charged or profitability achieved. For considerably large related-party transactions, some taxpayers have entered into advance pricing agreements with the TRD and other tax authorities to mitigate risk exposure.

We can help

Our transfer pricing team is staffed by experienced economists, tax lawyers, accountants, and financial analysts — all working together to give you the multi-faceted, incisive advice that you need. Our transfer pricing services include risk assessment, planning, compliance documentation, audit defense, dispute resolution, and legal advocacy.




Geoffrey K. Soh

Head, Transfer Pricing