One minute with Jonathan Stuart-Smith, partner and leader of the tax practice at Mazars in Thailand.
What’s keeping you busy at work?
Thailand has been gradually implementing the transfer pricing documentation requirements under Action 13 of BEPS 1.0, so that we now have local file, master file, CbCR and a Thai TP disclosure form to prepare. As with many countries, the Thai Revenue Department has a practical preference for local comparables, although there is some room to use non-Thai comparables for certain transactions such as royalties. From 2021, the local file has to be submitted in the Thai language, so this is keeping us busy.
We are also seeing an uptick in M&A work as we emerge from the pandemic. Our inbound clients are looking at transactions to expand their presence in the Thai market, while Thai headquartered groups are looking beyond the traditional investment destinations of their ASEAN neighbours to Europe and the US.
How does Thailand’s tax regime compare with the UK’s?
There is far more tax legislation in the UK than in Thailand. The Thai revenue code is generally principles-based rather than being overly prescriptive, which of course sometimes leads to differing interpretations by taxpayers and the Revenue Department. These differences are generally resolved at the field level during the course of a tax audit rather than through the courts, which may be a reflection of Thai society as a whole, which favours consensus rather than challenge.
What do you know now that you wish you’d known at the start of your career?
The very best partners I have had the privilege of working with have been the most hands-on and detail-oriented, despite being senior partners and responsible for key client relationships. They would review every word of each piece of advice; questioning, challenging and not accepting until they were fully satisfied that the advice was logical, correct and met the client’s needs. So what I wish I’d known is that you need to be able to both focus on the details and think strategically, often concurrently.
Are there any new rules that are causing a particular problem?
Thailand has recently signed up for the BEPS multilateral instrument (MLI), including adoption of the principal purpose test (PPT). Anti-avoidance is a relatively new area for Thailand tax law, with not a huge amount of domestic case law or technical guidance to refer to. Hence, it is difficult to predict how the Thai Revenue Department will apply the PPT to its tax treaties in practice.
What are clients currently asking about?
From September 2021, Thailand requires overseas electronic services providers and online platforms to register for and pay VAT on the provision of digital services to non-VAT registered Thai consumers. We have been helping our overseas clients register and file monthly VAT returns, as this new provision applies not only to the global tech giants, but also for example to relatively small app providers. The registration threshold is annual revenues of around £40,000.
We are analysing how BEPS 2.0 will affect our clients in Thailand, particularly the implications of the overseas parent company jurisdiction adopting a pillar two global minimum tax of 15% on any tax incentives enjoyed by its Thai subsidiary. The Thai Board of Investment offers corporate income tax exemptions and reductions for targeted industries and activities, which could well be affected by a global minimum tax. The OECD’s concession of a substance-based carve-out may still leave profits exposed to a top-up tax. So, we are modelling the potential implications for clients, as well as monitoring developments.
You might not know this about me but...
I enjoy running as a way of getting to know a city. Highlights have been Tokyo’s Meguro river in cherry blossom season, New York’s Central Park in the fall and now the brilliant new Benjakitti Forest Park in central Bangkok. I am looking forward to running along the river Thames again on my next visit to London.
One minute with Jonathan Stuart-Smith, partner and leader of the tax practice at Mazars in Thailand.
What’s keeping you busy at work?
Thailand has been gradually implementing the transfer pricing documentation requirements under Action 13 of BEPS 1.0, so that we now have local file, master file, CbCR and a Thai TP disclosure form to prepare. As with many countries, the Thai Revenue Department has a practical preference for local comparables, although there is some room to use non-Thai comparables for certain transactions such as royalties. From 2021, the local file has to be submitted in the Thai language, so this is keeping us busy.
We are also seeing an uptick in M&A work as we emerge from the pandemic. Our inbound clients are looking at transactions to expand their presence in the Thai market, while Thai headquartered groups are looking beyond the traditional investment destinations of their ASEAN neighbours to Europe and the US.
How does Thailand’s tax regime compare with the UK’s?
There is far more tax legislation in the UK than in Thailand. The Thai revenue code is generally principles-based rather than being overly prescriptive, which of course sometimes leads to differing interpretations by taxpayers and the Revenue Department. These differences are generally resolved at the field level during the course of a tax audit rather than through the courts, which may be a reflection of Thai society as a whole, which favours consensus rather than challenge.
What do you know now that you wish you’d known at the start of your career?
The very best partners I have had the privilege of working with have been the most hands-on and detail-oriented, despite being senior partners and responsible for key client relationships. They would review every word of each piece of advice; questioning, challenging and not accepting until they were fully satisfied that the advice was logical, correct and met the client’s needs. So what I wish I’d known is that you need to be able to both focus on the details and think strategically, often concurrently.
Are there any new rules that are causing a particular problem?
Thailand has recently signed up for the BEPS multilateral instrument (MLI), including adoption of the principal purpose test (PPT). Anti-avoidance is a relatively new area for Thailand tax law, with not a huge amount of domestic case law or technical guidance to refer to. Hence, it is difficult to predict how the Thai Revenue Department will apply the PPT to its tax treaties in practice.
What are clients currently asking about?
From September 2021, Thailand requires overseas electronic services providers and online platforms to register for and pay VAT on the provision of digital services to non-VAT registered Thai consumers. We have been helping our overseas clients register and file monthly VAT returns, as this new provision applies not only to the global tech giants, but also for example to relatively small app providers. The registration threshold is annual revenues of around £40,000.
We are analysing how BEPS 2.0 will affect our clients in Thailand, particularly the implications of the overseas parent company jurisdiction adopting a pillar two global minimum tax of 15% on any tax incentives enjoyed by its Thai subsidiary. The Thai Board of Investment offers corporate income tax exemptions and reductions for targeted industries and activities, which could well be affected by a global minimum tax. The OECD’s concession of a substance-based carve-out may still leave profits exposed to a top-up tax. So, we are modelling the potential implications for clients, as well as monitoring developments.
You might not know this about me but...
I enjoy running as a way of getting to know a city. Highlights have been Tokyo’s Meguro river in cherry blossom season, New York’s Central Park in the fall and now the brilliant new Benjakitti Forest Park in central Bangkok. I am looking forward to running along the river Thames again on my next visit to London.
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