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12.4.4. APAs and Dispute Resolution Mechanisms

Advance Pricing Agreement

Thailand has an APA practice in place. The purpose of the APA practice is to determine in advance a pricing policy and related conditions regarding specified future intra-group transactions. Only bilateral APAs are possible.

The process is initiated by the lodging of a letter of intent (APA proposal) with the director-general of the Revenue Department, which can be followed by a non-binding pre-filing meeting. A number of documents are required to be submitted before any pre-filing meeting and the formal APA request itself must be submitted at least 6 months prior to the opening of the first tax year for which the APA is sought.  The APA request must include a specified number of detailed documents. In addition, the tax authorities may request any additional information they deem necessary, and the taxpayer is required to disclose to the Thai tax authorities any documents submitted to foreign tax authorities in relation to the APA within 7 days of such submittal.

From accounting periods beginning on or after 1 January 2021, taxpayers with cross-border related party transactions may request a bilateral APA (BAPA) with the Competent Authority (CA) of a treaty partner.

The APA is granted for a specific period of time i.e. 5 years and roll-back to past years is generally not allowed. It may be withdrawn in a number of situations, including the provision of incorrect or insufficient information, non-compliance with the APA’s terms and conditions, a change in the factual circumstances, or an amendment to domestic law or a tax treaty with relevance to the APA.

Dispute Resolution Mechanisms

Most Thai tax treaties contain a mutual agreement procedure (MAP) clause whereby the competent authorities of the Contracting parties may enter into consultation in order to resolve cases of double taxation not in conformity with the convention. In practice, however, there is little experience with MAPs.