Intercompany management charges are fees paid by a Thai subsidiary to its foreign parent company or a group HQ for services such as strategic management, administrative support, or technical assistance.

For these charges to be tax-deductible for Corporate Income Tax (CIT) in Thailand, they must comply with the arm’s length principle and represent actual services rendered that benefit the Thai entity.

General Criteria CIT Deductibility

• Charges must be for actual services rendered to the Thai entity.
• Services must provide an economic or commercial benefit to the Thai entity.
• Services should not be shareholder activities or duplication of local functions.
• The pricing of the services must be at arm’s length.
• Benefits received should be in line with the charge.

Documentation Needed For CIT Deduction

• Invoice from the HQ or service provider.
• Detailed intercompany service agreement outlining the nature and scope of services, duration of services, and rate of service fee.
• Proof of services rendered (e.g., time sheets, reports, emails, project documentation).
• Withholding tax certificates (P.N.D. 54) for the payment remitted abroad (if applicable) and PP.36 (VAT Reverse Charge Form), as typically required for import of services.
• In case of No deduction of withholding tax at source, and the prevailed applicable Double Tax Agreement (DTA) shall be verified.
• Justification for the “arm’s length” nature of the charge (e.g., benchmarking study, comparable activities).
• Proof of payment (e.g., bank transfer slips).

References

• Thai Revenue Code, Section 65 ter (3)
• Thai Revenue Code, Section 71 bis and 71 ter (Transfer Pricing provisions)
• Ministerial Regulation No. 369 (B.E. 2563)
• Notification of Director-General of Revenue Department No. 407 (B.E. 2564)
• OECD Transfer Pricing Guidelines