Why Your Business Needs a Transfer Pricing Compliance Service

In an environment where transfer pricing regulations are continually evolving, engaging a transfer pricing compliance service is an important strategic decision that safeguards a company’s financial and reputational standing.

In today’s globalised economy, multinational enterprises (MNEs) operate across various jurisdictions, engaging in transactions between related entities. The pricing of these intercompany transactions, known as transfer pricing, has attracted significant attention from tax authorities worldwide, including Thailand. To ensure compliance with local regulations and mitigate potential risks, businesses in Thailand are increasingly turning to transfer pricing compliance services. This blog explores the benefits of such services for businesses operating in Thailand.

Understanding Transfer Pricing Compliance

Transfer pricing refers to the prices charged for goods, services, or intangible assets transferred between related entities within an MNE. The primary objective is to ensure that these transactions are conducted at arm’s length, meaning the prices are consistent with those that unrelated parties would agree upon under similar circumstances. Non-compliance with transfer pricing regulations can lead to tax adjustments, penalties, and reputational damage.

Benefits of Transfer Pricing Compliance Services

1. Regulatory Adherence

Thailand’s Revenue Code Amendment Act (No.47) B.E. 2561 (2018) introduced comprehensive transfer pricing regulations effective from 1 January 2019. Businesses with annual revenues exceeding THB 200 million are mandated to prepare and submit transfer pricing documentation. Engaging transfer pricing compliance services ensures that companies adhere to these regulations, thereby avoiding potential penalties and fines. 

2. Risk Mitigation

Non-compliance with transfer pricing rules can result in significant financial repercussions, including additional tax assessments and penalties. Transfer pricing compliance services assist businesses in identifying and mitigating these risks by ensuring that intercompany transactions are appropriately priced and documented. These services help companies establish robust policies, conduct regular reviews, and maintain proper documentation to support their transfer pricing positions. By proactively addressing compliance requirements, businesses can reduce the likelihood of disputes with tax authorities, avoid reputational damage, and ensure operational efficiency. Engaging experts in transfer pricing compliance enhances transparency and fosters better financial planning.

3. Enhanced Documentation

Proper documentation is crucial in defending transfer pricing positions during tax audits. Compliance services provide comprehensive support in preparing the necessary documentation, including transfer pricing disclosure forms and local files, which detail the nature of related-party transactions and the methodologies applied. These services also ensure that documentation aligns with regulatory requirements and international guidelines, such as the OECD’s BEPS framework. By maintaining accurate and up-to-date records, businesses can demonstrate compliance, reduce the risk of tax adjustments, and strengthen their position in case of disputes. Well-structured documentation also facilitates smoother interactions with tax authorities and minimizes potential financial liabilities.

4. Strategic Tax Planning

Other than compliance, transfer pricing services offer strategic insights into tax planning. By analysing intercompany transactions, businesses can identify opportunities for tax optimisation, ensuring that profits are allocated efficiently across jurisdictions while remaining compliant with local and international regulations.

5. Consistency with Global Standards

Thailand’s transfer pricing regulations are largely aligned with the OECD Transfer Pricing Guidelines. Engaging compliance services ensures that businesses’ transfer pricing policies are consistent with both local and international standards, facilitating smoother operations across borders.

6. Proactive Audit Preparedness

   

With tax authorities globally increasing scrutiny on transfer pricing practices, being prepared for potential audits is essential. Compliance services help businesses maintain readiness by ensuring that all transfer pricing policies and documentation are up-to-date and defensible, thereby reducing the likelihood of disputes.

Choose Forvis Mazars for Transfer Pricing Compliance

Forvis Mazars is a leading audit, accounting, tax, legal, and financial advisory practice in Thailand, combining the benefits of an integrated global partnership with local expertise. Their transfer pricing compliance services include: 

• Transfer Pricing Reports and Benchmarking Studies: Providing detailed analyses to support the arm’s length nature of intercompany transactions.
• Policy Implementation: Assisting businesses in developing and implementing transfer pricing policies that align with both Thai regulations and OECD guidelines.
• Planning and Structuring: Offering strategic advice on structuring intercompany transactions to achieve tax efficiency while ensuring compliance.
• Compliance and Documentation: Supporting the preparation of mandatory documentation, including transfer pricing disclosure forms and local files.
• Audit Support: Providing assistance during tax audits related to transfer pricing issues, ensuring that businesses can justify their transfer pricing positions to the authorities.

In an environment where transfer pricing regulations are continually evolving, engaging a transfer pricing compliance service is an important strategic decision that safeguards a company’s financial and reputational standing.

For businesses operating in Thailand, partnering with experienced professionals like Forvis Mazars provides the assurance that their transfer pricing practices are compliant, efficient, and aligned with both local and international standards.