Advance Blog

January 30, 2018
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Thailand’s Customs & Tax Landscape – Look Back at 2017 and Ahead into 2018

By  Grant Thornton

2017 was an eventful year for Thai tax collection agencies.  The customs law was consolidated with introduction of a new Customs Act.  Prior to 13 November 2017 – the date that the new Customs Act became legally effective – the country had 23 sets of customs legislations were enacted from 1921 to 2014.  While the new law does not significantly alter the Thai customs regulatory landscape, it contained important changes that, in theory, should give tax payers stronger (and clearer) legal footing to contest the Customs Department in the event of disputes. The burden of proof is more favorable for the taxpayer as compared to the prior customs law, willful intent is now a factor for determining guilt for duty evasion, and the statutory penalties for many offences have been reduced.

The excise tax structure also received an overhaul with the enactment of a new Excise Tax Act in that same year.  Excise tax rates were revised for all products and the tax is now collected based on the recommended retail price of products.  The decision to use retail price as a basis for tax assessment represented a major departure from the prior structure that applies the producer’s price (i.e., ex-factory) for domestic goods and customs value for imported goods. While the intention was to resolve problems of underpricing, applying the recommended retail price is not without problems.  Given that identical products are often sold at different retail prices in the market, the Excise Department had to issue complex guidelines for tax payers to identify the recommended retail price for tax assessment.

Also, on 26 January 2017, Thailand became the 139th member of the Organisation of Economic and Co-operative Development’s (“OECD”) Global Forum on Transparency and Exchange of Information for tax purposes.  Thailand has now formally become a part of the international community that will work to implement standards on the exchange of financial and tax information of taxpayers, both on the request of other countries as well as automatically in other cases.  Subsequently, or on 2 June 2017, Thailand officially joined the Base Erosion and Profit Shifting (“BEPS”) inclusive framework under the OECD, which was established in January 2016. Thailand, by joining the BEPS inclusive framework, also agreed to implement the basic actions set forth by BEPS. As such, Thailand will have to adopt legislation for transfer pricing documentation and country by country reporting as set out under the BEPS action plan.

Looking forward into 2018, this year would likely see a landmark development for the Revenue Code.  After having been in the government’s legislative pipeline for over two years, the anticipated draft transfer pricing law might finally be enacted.

Transfer pricing may occur in business transactions conducted between related enterprises.  Simply stated, there is a temptation – at least in the perception of tax authorities – for related enterprises to transfer profits to move profits from a high-income tax jurisdiction to a low-income tax jurisdiction through manipulating the prices for goods sold or fees for services provided by related enterprises.  Transfer pricing laws aims to achieve a fair allocation of taxable revenues between the related enterprises.  At the heart of a transfer pricing law is the attempt to construct an arms-length price as a proxy for open and free market conditions.  In other words, tax authorities are trying to determine whether the price or fee paid between affiliates are comparable to payments made amongst non-related third parties for the same goods or services.  Transfer pricing laws results in the taxpayer having to perform an analysis of key business and performance metrics in the taxpayer’s industry (often referred to as benchmarking studies), prepare transfer pricing documentation as an evidentiary collection exercise, and filing reports based on such studies and documentation with the tax authorities.

The Thai government got off to an early start in 2018.  The Cabinet vetted through the draft transfer pricing law in January and is currently placing the legislation before the national legislative assembly for a final hearing and decision for enactment.  If enacted, companies doing business in Thailand with an annual revenue of over 30 million Baht (the statutory threshold stated on latest proposed draft law) may be required maintain transfer pricing documentation on related party transactions and file reports on the transactions with the Revenue Department.

Grant Thornton
Grant Thornton is one of the world’s leading organisations of independent assurance, tax and advisory firms. These firms help dynamic organisations unlock their potential for growth by providing meaningful, actionable advice. Proactive teams, led by approachable partners in these firms, use insights, experience and instinct to understand complex issues for privately owned, publicly listed and public sector clients and help them to find solutions. More than 40,000 Grant Thornton people, across over 130 countries, are focused on making a difference to clients, colleagues and the communities in which we live and work. For more information visit

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