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Consequences of not submitting a Disclosure Form

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Consequences of not submitting a Disclosure Form

You may have heard news recently that the Revenue Department has been strict with taxpayers in cases where a business operator fails to submit a Disclosure Form within the specified period. Even though a business operator has the duty to submit said form, they may be unaware of such requirement.

What is a Disclosure Form?

A Disclosure Form is an annual report of a company or partnership under Section 71 bis of the Revenue Code. It requires companies or partnerships with related party transactions and income of more than Baht 200,000,000 to file a Disclosure Form together with an annual corporate income tax return (PND 50) within 150 days from the end of the accounting period.

What information does the taxpayer need to declare in the Disclosure Form?

1. List of companies or juristic partnerships that are related to the taxpayer, regardless of whether or not they conduct business in Thailand;

2. The number of transactions between the taxpayer and related companies or juristic partnerships in the accounting period for which the Disclosure Form is filed; and

3. Other information as required, such as details of the person responsible for preparing consolidated financial statements, business restructuring and transferring intangible assets between each other.

Details of relationships considered as related companies and thus subject to a Disclosure Form are as follows:

1. A juristic person holds shares in another juristic person, either directly or indirectly, of not less than 50% of the total capital, as follows

From the two examples above, if each company has revenues of more than Baht 200,000,000, the companies that must submit a Disclosure Form are:

1.1 A1 Co., B Co. and C Co; and

1.2 A2 Co. and C 2 Co.

2. A shareholder or a partner who holds shares or is a partner in one juristic person, directly or indirectly of not less than 50% of the total capital, and also holds shares or is a partner in another juristic person, directly or indirectly of not less than 50% of the total capital.

From example 1.1, B Co. and C Co. have a common shareholder of not less than 50%; therefore, if each company has income of more than Baht 200,000,000, B Co. and C Co. are obliged to file a Disclosure Form.

3. Juristic persons having a relationship with each other in terms of capital management or control in such a way that one juristic person cannot operate independently from another, as prescribed by the Ministerial Regulation No. 369 (B.E. 2563).[1]

For example, a company which operates dependent on another company by having commercial or financial requirements in such a way that is considered as a transfer of profits, e.g. the requirements, any agreement or contract relating to the sale of goods or services, marketing and advertising; or any other commercial or financial requirements related to borrowing money, other financial assistance or cooperation, regardless of whether or not it is made in writing.

From example 1.2, if A2 Co. is the source of loans for all companies in which A2 Co. holds shares, all companies have a relationship in capital, management or control, and each company has revenues in excess of Baht 200,000,000; then B2 Co., B3 Co. and B4 Co. are also obliged to submit a Disclosure Form as companies that have a relationship with each other in terms of capital, management or control, even though these three companies own less than 50 percent of the shares in each other

Methods for submitting a Disclosure Form

1. Physical submission at the Area Revenue Branch Office where the business establishment is located (150 days from the last day of the accounting period).

2. Submission by e-filing on the website ‘www.rd.go.th’ (158 days from the last day of the accounting period).

Penalties for not submitting a Disclosure Form

There shall be a fine not exceeding Baht 200,000[2] for non-submission. However, the Revenue Department has set the fine rate for accounting periods beginning on or after 1 January 2020 as follows:

1. Late submission not more than seven days from the expiration date: Baht 50,000

2. Late submission more than seven days from the expiration date: Baht 100,000

3. Non-submission is discovered by the Revenue Officer: Baht 200,000

 

Therefore, if any company has a revenue more than Baht 200,000,000 and is a company that has a relationship with another company as mentioned above, such company should not neglect to submit a Disclosure Form because successful submission shall negate any violation of the rules required by law and the accompanying heavy fines.

Extension of submission period

In order to mitigate the tax burden for the taxpayer who has been affected by the pandemic and thus unable to hold a meeting of shareholders and resulting in an incomplete shareholders list, which is an important information to consider the duty to file the Disclosure Form, the Government has issued a Notification of Ministry of Finance re: Extension of Transfer Pricing Disclosure Form Submission (No.2) dated 25 March 2022. The Notification grants an extension as follows:

1. For the accounting period between 1 January 2020 - 31 December 2020, which should be submitted within 150 days from the last day of the accounting period but was extended to 30 June 2021 according to the previous extension announcement, it will be extended until 30 May 2022.

2. For the accounting period during year 2021, which should be submitted by 23 May 2022 to 30 May 2022, a submission via e-filing shall be granted for another eight days.

If you wish to consult about tax issues or if you have inquiries on the Disclosure Form submission, please do not hesitate to contact us.

 


[1] Please see more details in the Ministerial Regulation No. 369 (B.E. 2563) issued under the Revenue Code on improving income and expenses of related companies or juristic partnerships
[2] Section 35 ter of the Revenue Code