Bangkok--21 Oct--PwC Thailand
PwC Thailand advises business operators to prepare themselves to be ready for changes in the law and tax rules and regulations after the transfer pricing provisions were enacted into law, and the effects of the new accounting standard on tax compliance. In addition, new guidelines set by the Revenue Department and the Supreme Court provide the impetus for studying precedent cases which correspond with the operator's business to mitigate the risk of tax investigations.
In addition to the tax environment, the Personal Data Protection Act ('PDPA'), the and the enforcement of the new customs law, particularly the change in customs investigation methods are of great interest to operators alike. Operators who aren't well prepared to cope with these changes may be widely affected.
Somboon Weerawutiwong, Tax Lead Partner of PricewaterhouseCoopers Legal & Tax Consultants Ltd., said during PwC Thailand's Symposium 2019 (A close look at recent legal and tax developments – it's time to act) that the government has enacted several new laws to cope with the age of the digital economy. These include laws that cover the PDPA that will be fully effective next year or the transfer pricing provisions that have already been enacted.
The Revenue Department has set a target for its tax collection for 2020 at THB2.11 trillion, which intends to use to accommodate spending on future investment. During the implementation of its five-year road map (2016 - 2020), the Revenue Department sets the goal of enhancing and strengthening its policy to make itself ready for Thailand 4.0. As a tax collection authority, it sets a policy enhancement target and issues tax measures that are responsive to economic changes as well as data exchanges to promote trade and investment, all of which are reflected in the introduction of new laws and regulations that will enable it to achieve its tax collection target.
The Revenue Department's quest for achieving its collection target has resulted in the enactment of the transfer pricing provisions that would impact businesses the most.
According to the transfer pricing law, businesses with revenues of THB200 million or more must prepare a transfer pricing report which includes related party information in each accounting period, in accordance with the form prescribed by the Director-General, and submit the report together with their annual corporate income tax returns. This will afford the Revenue Department sufficient information to investigate the business operator's compliance with the provisions.
In addition, the change to new accounting standards is another challenge that businesses are facing as it will affect their tax preparation, specifically with regard to methods of revenue and expense recognition. Although the Revenue Department hasn't yet provided any regulations or guidelines supporting the new accounting standards, businesses should plan ahead and prepare for the change.
As the economy is driven, inter alia, by imports and exports, the customs law has also been amended to accommodate the current import and export environment. Importers and exporters need to understand the new customs rules and regulations, particularly the new method of customs investigation, in order to be able to handle the situation if they're facing customs investigations and potential assessments.
"Therefore, businesses need to keep up with the Revenue Department's policy changes, which are reflected in the enactment of new laws, amendments to existing laws and those that are being drafted. Also, businesses should learn from these new laws, new interpretations of Revenue rulings and/or Supreme Court decisions in order to analyse how they will be affected and how the interpretations and precedent cases can be applied to businesses to help them be fully compliant, in order to manage and mitigate the risk," said Somboon.
Furthermore, other laws that business operators should take an interest in are the Cybersecurity Act and the PDPA. Especially, PDPA will play a significant role in shaping the security within the cyber world for citizens who may have had their personal data collected without their consent when procuring services or conducting transactions on the internet or from the risk of having their personal information violated. This new law will impact organisations, business operators and businesses that collect personal data of consumers and/or business provide services directly to customers such as commercial banks, financial institution, financial service providers and social media operators, among others.
Currently, there may be many Thai business operators who aren't aware of that PDPA is now in force and will become fully effective on 28 May 2020. Therefore, it's prudent that in the meantime, business operators seek a thorough understanding of the laws together with professional advice which will help ensure proper compliance and mitigate civil and criminal risks should any incidents of data breach take place.
"As we know many changes are underway in 2020, business operators should be fully prepared and ready in terms of the organisation, personnel, knowledge and strategies to stay abreast of the new laws. Therefore, proper legal and tax planning is a solution that will foster rapid business growth and uphold brands and images as well as avoid the adverse effects, whether they be in the form of substantial costs incurred to lower the risk and exposure to investigations or assessments or unnecessary tax cost compounded civil and criminal liabilities as well as impact on image and reputation of business organisations," Somboon concluded.