Advance Blog

January 25, 2018
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Thailand joins the Inclusive Framework on BEPS

By  Utumporn Tongpian, Senior Manager at BDO Thailand

In 2017, Thailand became the 98th jurisdiction to join the OECD’s Inclusive Framework on base erosion and profit shifting (BEPS).

The Inclusive Framework, which now has more than 100 members, will monitor and peer review the implementation of the minimum standards of the BEPS package as well as complete the work on standard setting to address BEPS issues. Membership will allow Thailand to participate on an equal footing with other Inclusive Framework members.

As a member, Thailand commits to implement the four minimum standards of the BEPS Package as well as develop a monitoring process to review its own tax systems and identify and remove elements raising BEPS risks.

The four minimum standards developed by OECD members and G20 countries are:

(1) to fight harmful tax practices (BEPS: Action 5),

(2) prevent tax treaty abuse, including treaty shopping (Action 6),

(3) improve transparency with Country-by-Country Reporting (Action 13), and

(4) enhance the effectiveness of dispute resolution (Action 14).

Thailand’s harmful tax practices

The OECD recently released its 2017 Progress Report on Preferential Regimes that feature harmful tax practices, pursuant to BEPS: Action 5. The following preferential regimes in Thailand were identified:


These regimes all offer tax concessions, primarily to promote or attract the establishment of such regimes in Thailand. Thai tax legislation will now be focused on aligning with the BEPS initiatives, including the review of these preferential regimes that feature harmful tax practices.

Where a regime is “in the process of being eliminated,” as well as where a regime is “in the process of being amended,” this reflects that Thailand has communicated to the Forum on Harmful Tax Practices (FHTP) its government’s commitment to abolish or amend the regime in light of the discussions by the FHTP about the features of the regime that are of concern, and that the FHTP could reconsider the description of these regimes if insufficient progress was being made.

Renewed focus on transfer pricing

The BEPS initiatives were born in 2013 and will result in the most significant re-write of international tax rules in a century. A guiding principle of the initiatives is that profits should be taxed where the real economic activities generating the profits are performed and where value is created.

Several years ago, Thai transfer pricing legislation was drafted to address the pricing of related party transactions but as yet no new legislation has been enacted. Thailand is now committed to improving its transfer pricing rules to comply with international tax standards.

Pursuant to BEPS Action 13, multinational enterprises (MNEs) will be required to provide tax administrations with high-level information regarding their global business operations and transfer pricing policies in a “master file” that is to be available to all relevant tax administrations. Second, it requires that detailed transactional transfer pricing documentation be provided in a “local file” specific to each country, identifying material related party transactions, the amounts involved in those transactions, and the company’s analysis of the transfer pricing determinations they have made with regard to those transactions.

Another key commitment for Thailand is to undertake steps necessary for the implementation of Country-by-Country (CbC) reporting for MNEs generating annual consolidated revenue equal to or more than EUR 750 million. CbC reporting will provide jurisdictions with country-by-country breakdowns of related party revenues, profits before income tax, income tax paid and accrued, number of employees, tangible assets, and other indicators of economic activities within large MNE groups. CbC reports will be disseminated through an automatic government-to-government exchange mechanism.

Utumporn Tongpian, Senior Manager at BDO Thailand
Utumporn has a wide range of experience in transfer pricing particularly in the areas of documentation, transfer pricing advisory, transfer pricing audit defense and bilateral APA works for MNE companies in Thailand. She has performed transfer pricing consultation for clients in many industries including manufacturing, distribution, trading and shared service providers. Utumporn has also participated in other tax services including tax review, tax compliance, tax investigation process, tax due diligence and tax process improvement projects.

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