Thailand Transfer Pricing Compliance: 2026 Update
Transfer pricing enforcement in Thailand is governed by domestic legislation rather than treaty law. The introduction of explicit transfer pricing provisions into the Revenue Code has transformed transfer pricing from an administrative concept into a statutory compliance obligation.
Legal Framework for Thailand Transfer Pricing Compliance
A. Transfer Pricing under the Revenue Code
Transfer pricing rules are codified in Sections 71 bis and 71 ter of the Revenue Code. These provisions empower the Revenue Department to assess whether income, expenses, or profits arising from transactions between related parties are conducted in accordance with arm’s length conditions. Where pricing or commercial terms differ from those that would have been agreed between independent parties under comparable circumstances, the tax authority is entitled to: (i) Adjust assessable income; (ii) Disallow or partially disallow deductible expenses; or (iii) Reallocate profits between related entities. The statutory framework places strong emphasis on substance over form, granting tax officers broad discretion to look beyond contractual wording and examine actual economic behavior.
B. Definition of Related Parties under Section 71 bis
Under Section 71 bis paragraph 2 of the Revenue Code, “Related companies or juristic partnerships” means two or more companies or juristic partnerships that are related to each other in any of the following manners:
(i) One juristic person holds shares in, or is a partner of, another juristic person, whether directly or indirectly, in an amount of not less than fifty percent of the total capital;
(ii) A shareholder or partner who holds shares in, or is a partner of, one juristic person, whether directly or indirectly, in an amount of not less than fifty percent of the total capital, also holds shares in, or is a partner of, another juristic person, whether directly or indirectly, in an amount of not less than fifty percent of the total capital; or
(iii) Juristic persons that are related to each other in terms of capital, management, or control in such a manner that one juristic person is unable to operate independently from another juristic person, as prescribed by Ministerial Regulation.
C. Scope of Related-Party Transactions
Transfer pricing rules apply to all transactions between related parties, whether domestic or cross-border. Covered transactions include, but are not limited to: Sale or purchase of goods, Provision of services and management fees, Royalties and intellectual property licensing, Intercompany financing and guarantees, Cost allocation and shared service arrangements. There are no statutory exemptions based on transaction type, and the cumulative transaction value is often relevant in audit risk assessment.
D. Arm’s Length Principle
The Revenue Code adopts the arm’s length principle as the governing standard for related-party transactions. Transactions must reflect pricing and conditions comparable to those that would be agreed between independent parties in similar circumstances.
E. Governance and Responsibility Framework in Transfer Pricing Compliance
Thai transfer pricing enforcement is documentation-driven but substance-focused under the Revenue Code. In practice, the tax authority evaluates not only whether transfer pricing documentation exists, but also whether internal governance supports the claimed pricing outcomes. A clear governance and responsibility framework enables a company to present a coherent, consistent, and credible narrative during tax audits.
1. Role of Management - Commercial substance and strategic alignment
2. Role of Finance and Tax - Pricing implementation, documentation, and disclosure
3. Role of Legal and Compliance - Contractual integrity and audit response
Companies engaging in related-party transactions must ensure that transfer pricing policies are supported by robust internal controls and consistent operational behavior in order to mitigate audit exposure and manage tax risk effectively under Thai law.
F. Sample of Rulings of Transfer Pricing
Ruling No.: GorKor 0702/217
Date: 14 January 2022 (B.E. 2565)
Subject: Corporate Income Tax – Determination of the nature of relationships between companies or juristic partnerships
Legal Issue:
Whether companies or juristic partnerships constitute “related companies or juristic partnerships” under Section 71 bis of the Revenue Code
Guideline for Interpretation:
If the same person, or the same group of people together, owns 50% or more of two or more companies (directly or indirectly), those companies are treated as related parties under Thai transfer pricing law.
The word “shareholder” does not mean only one individual. It can also mean several people acting together. So even if no single person owns 50% alone, the companies can still be related if the same group jointly controls them.
In the example, three individuals together own 100% of Company A, Company B, and Company C. Because the ownership group is the same, all three companies are considered related companies under the Revenue Code.
If any of these related companies has business income exceeding THB 200 million, it must file a transfer pricing disclosure report showing its related parties and the total value of transactions between them within 150 days after the end of the accounting period.
