“Of course we are pleased to see the guidance issued,” said Sorraya Boonsongprasert, an assistant tax director at HNP Counsellors Taxand. “Before the issuance of APA guidance, we had no guidance and direction in relation to APA, except for verbal discussions with Thai tax authorities.”
The document contains basic advice on the process of applying for an APA, but the fact there were no significant changes to the process is good news in Thailand, although there are still areas of uncertainty.
“The APA guidance issued is not a law,” said Boonsongprasert. “The intention of the guidance is to provide a guideline for Thai tax authorities and Thai taxpayers in relation to bilateral APAs. We do not see anything unexpected in the new guidance. However, we view that some statements related to documents for APA applications and the deadline for withdrawal of BAPA [bilateral advance pricing agreements] are still not clear. Further clarification should be sought from the tax authority.
Use of the APA system has been increasing prevalent.
“We believe bilateral APAs have become more popular in Thailand since it can minimise penalties and bring certainty related to transfer pricing enforcement for multinational companies.
It is thought the new guidance is perhaps an attempt to tempt more taxpayers to make use of APAs.
“Based on our discussions with the Thai tax authority, one objective of the release of new guidance is to encourage Thai taxpayers to enter into bilateral APAs,” said Boonsongprasert. “At present, two bilateral APAs have been concluded and approximately 15 applications have been submitted to the Thai Revenue Department.”
However, for unilateral APAs, there is not such good news. The director-general of the Revenue Department has not yet accepted any formal unilateral APA conclusions. As for multilateral APAs, there are yet to be any applications even submitted to Thai Revenue Department.
Despite the somewhat disappointing statistics, Boonsongprasert reports a good experience with the tax authorities when it comes to APA negotiation.
“Based on my experience with the submission of two bilateral APA applications, the competent authorities have been cooperative.”
The length of time taken to conclude an APA is a problem. This is down to a lack of specialist knowledge in the officials dealing with applications.
“Due to the limitation of resources among those who have extensive experience and knowledge of dealing with APAs at the Revenue Department and some unclear direction and guidelines in relation to APAs before the release of the new guidance, the consideration of each APA case is time consuming.”