Mutual Administrative Assistance in Tax Matters

On 3 June 2020, Thailand joined the Convention on Mutual Administrative Assistance in Tax Matters (MAC), and ratified the Convention on 22 December 2021. Germany had already ratified the convention in 2015.

The MAC was jointly developed by the OECD and the Council of Europe in 1998, and amended by protocol in 2010. The convention is aimed towards the prevention of Base Erosion and Profit shifting (BEPS), as well as the promotion of further tax co-operation between the 144 participating jurisdictions.

Details to the Convention

The Convention is set to enter into force in Thailand on 1 April 2022. The Convention includes various measures, such as an automated exchange of information between members of MAC (AEOI), the exchange of information on request (EOIR) and the spontaneous exchange of information (SEOI). Thailand has committed to implementing the first round of AEOI in 2023. Thailand is currently going through the process of aligning the national regulations with the Common Reporting Standard (CRS) required for the AEOI. In order to achieve this, Thailand published a draft of the CRS Act which is expected to come into force in early 2022.

Obligations in relation to the CRS Act

The CRS Act will impose obligations on financial institutions, primarily the collection and reporting of information to the competent authorities. Likely, financial institutions will be required to:

Arrange for their customers or controlling persons of their customers, whose financial accounts are maintained with such reporting financial institutions, to identify themselves;
Collect information and conduct customer due diligence to identify reportable accounts of reportable persons;
Report the relevant information to the Tax Revenue Department; and
Maintain relevant data and documents.

A penalty for non-compliance will be imposed as well.

Further steps to tackle BEPS in Thailand

Furthermore, Thailand amended the Revenue Code giving the Director-General of the Revenue Department the authority, to collect and exchange tax information with other jurisdictions. It is also expected that Thailand will be removed from Europe’s so called grey list (Annex II of the European Union’s list of non-cooperative jurisdictions for tax purposes) once the Convention comes into force.

Additionally, there is a 15 step action plan to further tackle BEPS. Most recently, on 9 February 2022, Thailand signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI), which is part of the BEPS action plan step 15. This allows Thailand to modify existing bilateral tax treaties in a synchronized and efficient manner to implement the tax treaty measures of the BEPS action plan without having to devote resources to the renegotiation of each treaty.