Thailand does not have specific economic substance requirements. However, the tax authorities may disallow the deduction for certain expenses or recharacterize transactions if they find that such transactions/ expenses are without economic substance.
Thailand has agreed to exchange tax rulings with eligible jurisdictions from 1 April 2018 in implementation of BEPS Action 5. A specific ruling can be exchanged with a relevant jurisdiction if it is international in nature and affects the relevant jurisdiction. The exchange is possible if there is an agreement between Thailand and the relevant jurisdiction providing for the spontaneous exchange of tax information. The agreement can be a tax treaty or the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters. Exchange is also required for “historical” rulings granted:
- On or after 1 January 2016 but before 1 April 2018; or
- On or after 1 January 2014, but before 1 January 2016, provided they were still in effect as of 1 January 2016.
Thailand acceded to the OECD Mutual Assistance Convention as amended on 3 June 2020. However, the convention has not yet entered into force with respect to the country. Thailand has to date not signed the CRS Multilateral Competent Authority Agreement.
Thailand concluded an Intergovernmental Agreement (IGA) with the United States on 4 March 2016 to improve international tax compliance and to implement the U.S. Foreign Account Tax Compliance Act (FATCA). The agreement will enter into force on the date of written notification by Thailand to the United States that the necessary internal procedures are in place. Previously, the United States treated the IGA to be in effect from 30 June 2014, when the United States and Thailand had reached an agreement in substance and Thailand had consented to disclose this status.