Consolidated Tax Filing in Thailand

Consolidated Tax Filing in Thailand

Thailand’s tax system generally requires companies to file taxes individually, as there is no provision for group tax filing or consolidated tax returns under the Thai Revenue Code. However, there are specific rules and arrangements that may involve related entities, such as transfer pricing regulations and group structures for tax planning. 

1. No Consolidated Tax Filing for Groups

• In Thailand, each legal entity is treated as a separate taxpayer.

• Every company, regardless of whether it is part of a group, must file its own corporate income tax return (Form PND.50) and other applicable tax returns.

• There is no mechanism to offset profits from one company against losses from another within the same group.

2. Transfer Pricing Compliance

For groups of companies, transfer pricing regulations are an important consideration:

• Arm's Length Principle: Transactions between related parties (e.g., parent company and subsidiaries) must be conducted at market value.

• Transfer Pricing Documentation:

• Companies with annual revenue exceeding 200 million THB must submit a Transfer Pricing Disclosure Form with their annual tax return.

• Supporting documentation, such as transfer pricing policies and comparability analysis, may be required upon request by the Revenue Department.

• Failure to comply with transfer pricing rules can result in tax adjustments and penalties.

3. Tax Incentives for Group Structures

While consolidated tax filing is not allowed, Thailand offers tax incentives that may benefit group companies, such as:

• Regional Operating Headquarters (ROH):

• Companies providing support services to affiliates within a group may qualify for reduced corporate income tax rates and other benefits.

• Board of Investment (BOI) Promotions:

• Group companies in specific industries or projects (e.g., manufacturing, technology, or R&D) may be eligible for tax holidays, reduced rates, or exemptions.

• Eastern Economic Corridor (EEC):

• Tax incentives are available for group companies operating in the EEC area.

4. Loss Carryforward Rules

Although group-level loss offsetting is not permitted, individual companies can carry forward tax losses to offset future taxable income:

• Losses can be carried forward for up to 5 consecutive accounting periods.

• Proper documentation and records must be maintained to claim the loss carryforward.

5. Related Party Tax Considerations

For groups of companies, additional tax considerations may arise:

1. Withholding Tax:

• Payments such as dividends, royalties, or interest between group companies may be subject to withholding tax.

• Double Tax Agreements (DTAs) may reduce or eliminate withholding tax on cross-border payments.

2. Thin Capitalization Rules:

• While Thailand does not have formal thin capitalization rules, excessive interest payments to related parties may be scrutinized for transfer pricing compliance.

6. Filing Process for Group Companies

Each group company must:

1. Prepare Separate Tax Returns:

• File Form PND.50 for corporate income tax.

• Submit VAT returns (Form VAT 30) or withholding tax returns (Form PND.3/PND.53) individually.

2. Maintain Intercompany Documentation:

• Ensure compliance with transfer pricing regulations for intercompany transactions.

3. Pay Taxes Individually:

• Each entity is responsible for its own tax payments and compliance.

7. Practical Considerations for Groups

While consolidated tax filing is not available, companies can implement group tax planning strategies, such as:

• Structuring intercompany transactions to minimize overall tax liabilities.

• Leveraging tax incentives (e.g., BOI or ROH).

• Ensuring compliance with international tax treaties to avoid double taxation.

If you need detailed assistance with group tax planning, transfer pricing documentation, or any specific issue related to Thai tax law, feel free to ask!

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