Thai taxpayers must prepare for disruption

"With many changes in Thailand's domestic and international tax approach that took place earlier this year and many to come in the near future, companies should be aware of the potential disruption that will affect their business models," said Somboon Weerawutiwong, Lead Tax Partner at PwC Legal & Tax Consultants Ltd.

Speaking at the PwC Thailand Symposium 2017 – Dealing with disruption, Gearing up for change, Somboon said that Thai taxpayers need to familiarise themselves with the new laws and understand what the criteria are to put themselves in a better position to resolve any issues and manage their tax exposure.

Earlier in June, Thailand became an associate member of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS), which was initiated by the Organisation for Economic and Development (OECD). As a member of the Inclusive Framework on BEPS, Thailand is committed to adopting four minimum standards, which will be subject to peer reviews by other countries.

In June this year, the Revenue Department issued a second draft of its transfer pricing law, which requires Thai multinational companies to prepare transfer pricing documentation under domestic law. PwC expects the draft law to become effective soon.

The change makes it imperative that taxpayers equip themselves with the proper necessary documentation to substantiate pricing on related party transactions. Taxpayers should be mindful of the potential increase in cost of compliance.

On top of that, two main Acts – the Customs Act B.E. 2560 and Excise Tax Act – are being implemented this year. Key areas of change relate to bribes, appeals, and post-audit practices, including the introduction of new excise tax calculations based on the 'suggested selling price'. New regulations have also been issued for the Board of Investment (BOI), which include an increase in incentives to projects in the 'Targeted Core Technologies and Enabling Services'.

Revenue Department statistics on tax collection reveals that it has struggled to hit its budget in the first three quarters. The government has now introduced a Risk-Based Audit, which is a computerised system that will analyse tax risks based on 132 predetermined criteria. The Revenue Department believes this new approach will increase the efficiency of its tax collections. Overall, the tax audit environment is expected to more unrelenting than ever.