Thailand’s recent participation in the “Tax Inspectors Without Borders” assistance program endangers not so much legally but factually the long-term cherished cross-border tax structures among the land of smiles. It demands sooner or later increased requirements for local tax advice and international tax planning.
TIWB allows the OECD, which is behind this raid against international tax competition, to familiarise the Thai tax authorities with OECD tax policy and viewpoints by sending their expert auditors to a tax-legally underdeveloped country, as Thailand is considered not entirely unjustified.
In the past, Thailand has been deliberately reluctant to interpret and reclassify cross-border transactions and to reinterpret double taxation agreements and tax information exchange agreements. This was done with good reason, only ostensibly inefficient, and Thailand participated in this tax-friendly treatment in several ways and at several levels.
The formal reason for Thailand’s Revenue Department to sign up for the training course for a world of “taxation without borders” is the desire to tax cross-border e-commerce and streaming services. However, this is not a limitation but only a starting point for the new right way of taxation with the friendly and targeted support by the OECD.
To address the tax challenges of the digital economy is just the first step on the 15-points-action BEPS list of the OECD. The base erosion and profit shifting initiative is e.g. also directed towards the topics of CFC controlled foreign companies, transfer pricing, abuse of tax treaties, and aggressive tax planning arrangements.
The tax counsellor PUGNATORIUS Ltd. analyses and monitors further developments and will provide practicable solutions for the more stringent requirements of future Thai tax planning. The announcements of the Thai Revenue Department are from June 2020. The Bangkok law firm sees a pressing need for action in this area for a variety of Thai tax issues.