Tax Advisory Services
Main Service Lines
1. TRANSFER PRICING
2. CROSS-BORDER TAXATION
3. THAI TAXATION
1. TRANSFER PRICING
Transfer pricing ("TP") tax adjustments is a taxation principal whereby the tax authority uses their powers to make an adjustment to tax calculations (usually corporate income tax calculations), if related party transactions had been executed at other than at an arm's-length price (market price). The adjustment will be made so that the adjusted tax calculation would reflect the appropriate tax, had the relevant related party transaction was executed at an arm's-length price. This principal exists because multinational companies may have the motive to shift profits into lower tax rate jurisdictions by manipulating their related party transaction values.
1.1. Documentation Services (Evidence Documentation)
This service is to assist clients prepare documentation to support that their transactions with related parties (i.e. that their transfer pricing) were indeed at arm's-length pricing. We will analyze whether your company's related party transactions in accordance with the arm's-length principal and then document our findings. (I.e., we will prepare TP documentation). If your company becomes subject to a TP audit by the Revenue Department of Thailand, such documentation may serve as a defense against inappropriate claims that your group has been transacting at other than at arm's length prices/rates. Generally, our procedures entail the following:
(Step 1) Collect basic information about the tested party (i.e. your company). (E.g., The audited financial statements for the past three years, interviewing each department heads and managers.)
(Step 2) Obtain an understanding of the business, transactional flows, strategy, and industry of the tested party.
(Step 3) Obtain an understanding of the functions, risks taken, and intangible assets of the tested party.
(Step 4) Select the best transfer pricing method. ("Step 4" through "Step 6" are the economic analysis steps.)
(Step 5) Collect comparable benchmark data and establish the arm's-length range.
(Step 6) Identify the interquartile range of the arm's-length range, and determining whether the tested party falls within the interquartile range.
* If the tested party's financial results fall outside of the interquartile range, we will analyze whether there were special factors which should be accounted for by making financial adjustments. If it is appropriate to make financial adjustments, we will perform such adjustments.
(Step 7) Document the significant information obtained while performing the aforementioned steps. (i.e., TP documentation)
(Step 8) Draft a management letter. (If, during the course of performing the aforementioned steps, TP issues or areas of improvement comes to our attention, we will prepare a separate report (i.e. a management letter) for management of the tested party. The content of such letter may be useful in management of tax adjustment risks arising from TP issues.)
** We can perform this TP documentation service if the tested party is a Thai company.
1.2. Transfer Pricing Tax Audit Defense
In the event of a tax audit by the Revenue Department of Thailand, and the issue area involves transfer pricing, we will assist you with your dealings with the tax officers. We will analyze whether there truly is a TP issue, whether there were special circumstances which your company should raise, and plan with you how to present your defense. We have Thai professionals who has extensive experience in assisting multi-national companies operating in Thailand when audited by the Revenue Department.
2. CROSS-BORDER TAXATION
When a foreign registered company does business in Thailand, its activities, relationship with agents, or assets in Thailand may inadvertently cause the income arising from Thailand to be subject to Thai tax. In such cases, it is possible that tax is paid in the home country on such income when it may have been possible to avoid paying such tax by taking a foreign tax credit or some other measure, while no tax is paid in Thailand for years. If, at some point in time, the Thai tax authorities conducts a tax audit on the activities in Thailand, the fact that tax has not been paid in Thailand may come to light. In such case, the foreign company, its agent in Thailand or some other party may become retroactively liable for the unpaid Thai tax, penalties, and surcharges. If this happens, and the foreign company pays tax in Thailand, that company would have paid tax in the home country and in Thailand on the same income, and thus have caused "double taxation" (on the same income). If the company was aware of the tax implications, and planned ahead, it may have been able to not have effectively paid tax on such Thai-sourced income in the home country, and paid tax only in Thailand thereby avoiding a "double taxation" situation. In this sense, it is important to understand the tax implications of a business arrangement before commencing transactions.
We, at NNP can provide you with analysis on the international tax implications of cross-border transactions, to mitigate unnecessary tax risks, such as "double taxation".
2.1. Corporate Income Tax ("CIT")
• Advisory services on international tax treaties, where Thailand is a party to the treaty
• Advisory services on Permanent Establishments ("PE"). (i.e., analysis on existence of a PE or not.)
• Advice on the detailed calculation methods and required documentation for paying Thai CIT of Thai PEs
• Other relevant advisory services
2.2. Personal Income Tax ("PIT")
• Advisory services on the PIT implications of double tax treaties involving Thailand
• Tax analysis on expatriates dispatched to Thailand
• Other relevant tax analysis services
3. THAI TAX ADVISORY SERVICES
We provide a broad range of services in relation to taxation in Thailand. Our services include the following:
3.1. Revenue Department liaison services
If you need to deal with the Revenue Department ("RD") of Thailand (i.e. the Thai revenue authority), we can represent and liaise with the RD on behalf of your company, as well as plan and prepare for interactions with the RD. Our services include the following:
• Identification and tax analysis of key tax issue areas
• Planning and preparation for communicating with the RD
• Review of documents and information before submission to the RD
• Attending meetings with the RD
• Requesting private letter rulings from the RD
• Other relevant services
3.2. Corporate Income Tax
• Advisory services in relation to Corporate Income Tax of Thailand
• Tax planning and simulation
• Compliance: Tax form preparation and advice on supporting documents
3.3. Personal Income Tax
• Personal Income Tax ("PIT") calculation support
• Compliance: Tax form preparation support
• Tax and legal advisory and simulation services for amalgamations (Co A + Co B = Co. C), entire business transfers (including tax free transfers, where applicable), partial business transfers, and share transfers.
• Tax planning, including simulations using accounting journal entries
• Coordination and liaison with the RD to ensure that an entire business transfer is tax free. (If applicable.)
• Other relevant services
3.5. Tax Reviews (Tax Health Check-Up)
• Identification of tax issues and risk areas of your Thai subsidiary or acquisition target (with the consent and cooperation of the target company).