Thailand set to exchange financial data to combat transnational tax evasion

The Revenue Department of Thailand is set to enhance its efforts to combat transnational tax evasion through the exchange of financial information, according to its director-general, Lavaron Sangsnit. Thailand joined the Global Forum on Transparency and Exchange of Information for Tax Purposes in 2017 and has since been working towards adhering to international standards for tax cooperation.

The Convention on Mutual Administrative Assistance in Tax Matters (MAAC) is a multilateral treaty developed by the Organisation for Economic Co-operation and Development (OECD) and has 168 signatories as of March 2023. The framework promotes international cooperation and the exchange of tax information between countries, enabling tax authorities to effectively utilise the data.

There are three types of information exchanges under the MAAC: requested information exchange, spontaneous exchange of information, and automatic unsolicited exchange of information. The Revenue Department is currently preparing procedures and systems related to the automatic exchange of information, which includes three data sets.

For the accounting year 2021, multinational companies meeting specific conditions are required to submit a Country-by-Country Report from January 1, 2022. This report contains aggregate data on the global allocation of income, taxes paid, and economic activity among tax jurisdictions in which the companies operate. The purpose of this report is to improve transfer pricing documentation and provide tax administrations with information for high-level transfer pricing risk assessment.

Thailand signed the Multilateral Competent Authority International Agreement on the Exchange of Country Reports on December 9, 2022, and expects to begin exchanging country reports this month. The information gathered will be used for efficient tax administration, promoting tax transparency, fairness, and prevention of transnational tax evasion, as well as enhancing Thailand’s international competitiveness for investment.

The OECD’s common reporting standard (CRS) requires the Revenue Department to obtain information about multinational corporations from their financial institutions and automatically exchange that information with tax authorities of other jurisdictions. Thailand plans to begin CRS exchange in September 2023.

Thailand enacted a royal decree on information exchange on March 31, 2023, to implement global standards and improve transparency in accordance with the CRS requirements. Lavaron Sangsnit stated that the department is in the process of bringing the signed MAAC agreement to parliament for ratification. Once ratified, Thailand will need to implement the required international standards and procedures for information collection and automatic exchange.

The OECD has reported positive results in terms of increased tax collection and voluntary declaration of overseas assets for signatories to the MAAC agreement. In addition, the Revenue Department is expected to sign an agreement with the US Internal Revenue Service outlining the conditions for the exchange of financial account information of US citizens residing in Thailand, following the approval of a subordinate law detailing the information exchange under the Foreign Account Tax Compliance Act (FATCA), reports Bangkok Post.