By Tossaporn Kiattidamrongkul
The Thai Revenue Department (“TRD”) announced the Notification of Director-General (DG.N.) on income tax No. 408, dated 30 September 2021. The DG.N. requires a limited company carrying on business in Thailand, which is a part of a multinational group, to submit a Country-by-Country Reporting document (“CbCR”) in English, together with its annual corporate income (“CIT”) return (PND.50) for which the due date of filing is within 150 days from the end of an accounting period, if the company meets the following criteria.
- Having consolidated group revenue in the preceding accounting period of THB 28 billion and over, or not less than the pro-rata of THB 28 billion if the basis period is less than 12 months, and
- Applying to accounting periods commencing on / after 1 January 2021.
The entities which are required to lodge a CbCR in Thailand are detailed below:
- Ultimate parent entity (“UPE”) incorporated under the laws of Thailand, or
- There is no CbCR requirement in the UPE’s country of tax residence i.e., the UPE does not submit a CbCR in its own country, or
- There is no multilateral competent authority agreement (“MCAA”) for the automatic exchange of information with Thailand for the UPE’s country of tax residence, or there is a MCAA but the agreement has not yet been effective before the CbCR deadline, or
- The UPE has a MCAA with a Thai subsidiary, but there is a systemic failure of the automatic exchange of information which resulted in the TRD being unable to access the information exchange.
A Thai subsidiary company is exempt from the filing of a CbCR if the following criteria are met:
- The UPE appoints a surrogate for the subsidiary in a particular country to file a CbCR document in a country other than Thailand where a CbCR document is required, and
- The surrogate entity notifies its country of tax residence of the appointment, and
- The surrogate entity’s country of tax residence has domestic legislation in place to implement the CbCR, and
- The country of tax residence of the surrogate entity has a MCAA with Thailand and is effective before the deadline of the CbCR filing in Thailand, and
- The country of tax residence of the surrogate entity has not reported an incident of systemic failure in the automatic exchange of information with Thailand, and
- The Thai subsidiary notifies the competent authority in Thailand of the appointment.
However, the UPE can appoint a Thai subsidiary as a surrogate entity to submit the CbCR document in Thailand if there is no CbCR requirement in the UPE’s country of tax residence and the UPE notifies the competent authority in Thailand of such appointment. Additionally, a Thai surrogate entity is required to have the same accounting period of the UPE; otherwise, a Thai subsidiary is not able to be appointed as a surrogate entity to lodge a CbCR in Thailand.
Unofficial announcement from the TRD
It is likely that the deadline for the CbCR submission will be extended (from 150 days of the end of an accounting period) to within 1 year from the end of an accounting period. This is to be in accordance with Organization of Economic Co-Operation and Development (“OECD”) standards. It is expected that the TRD will officially publish a formal notification of this after the New Year.
There will be a minor change of the format of the transfer pricing (“TP”) disclosure form, which is already a filing requirement for companies with an annual turnover of THB 200 million or more per annum. The TRD will provide an additional entry to complete as to whether the company will have to file a CbCR or not. This will enable a Thai subsidiary company to notify its CbCR requirements via the TP disclosure form by including the entity and country of residence. However, this will also be officially announced by the TRD after the New Year.
This article was compiled by Khun Tossaporn Kiattidamrongkul - Associate Director who is one of the heads of the RSM Thailand Accounting & Taxation Division. Should readers of RSM Focus require additional information with respect to the CbCR requirements or other tax, payroll and accounting issues then they can contact Khun Tossaporn or one of RSM Thailand’s Tax Consultants by emailing an advice request to [email protected].