On June 3rd, 2020, Thailand became the 137th signatory state to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (the “MAC”).
Established jointly by the OECD and the Council of Europe in 1988, the MAC facilitates international cooperation and mutual assistance between tax authorities across jurisdictions in order to promote tax transparency, fairness in tax administration, and to prevent transnational tax evasion and avoidance. Its provisions include the exchange of information, simultaneous tax examinations, the service of documents, joint audit facilities, assistance in tax collection, and assistance in recovery. It also provides protections for taxpayers’ rights. Following its amendment in 2010, the MAC increased its focus on multilateral cooperation between states in the assessment and collection of taxes, with particular attention to combating tax evasion and avoidance.
Thailand’s participation in the MAC means that it must implement and comply with global agreements for the automatic exchange of information, such as the Common Reporting Standard (the “CRS”) and Country-by-Country Reporting (“CbC”), with the goal of preventing tax evasion and avoidance. The CRS is an international standard for the collection, reporting, and automatic exchange of financial account information on foreign tax residents. CbC Reporting requires multinational companies that meet certain conditions to provide local tax authorities with aggregate data on their global allocation of income, taxes paid, and economic activity among tax jurisdictions in which they operate in order to improve transfer pricing documentation and provide tax administrations with information to conduct high level transfer pricing risk assessment.
The Director-General of the Revenue Department stated that the Revenue Department is in the process of bringing the signed MAC agreement to Parliament for ratification. Once ratified, Thailand will need to implement the required international standards and procedures for information collection and automatic exchange.
As a party to the MAC, Thailand has expanded its network in the exchange of tax information, from the 60 foreign states that are parties to Double Taxation Agreements to more than 130 other signatories to the MAC agreement. The Revenue Department expressed its hopes that the provisions of the MAC will help the Revenue Department obtain data to analyze the tax behaviors and risks of multinational companies and help promote tax fairness, such as through law regulating the provision of digital services, which will enhance the competitiveness of domestic businesses and expand Thailand’s tax base.
Revenue Department News
Issue 37/2020, Published June 18, 2020
Thailand has joined the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC) with over 130 countries to promote tax transparency, fairness in tax administration, and to prevent transnational tax evasions, which is in accordance with the international cooperation framework that Thailand is a member of. His excellency Sarun Charoensuwan, the Ambassador of Thailand to France, was Thailand’s representative to attend the signing ceremony on June 3, 2020.
Mr. Ekniti Nitithanpraphas, the Director-General of the Revenue Department, revealed that MAC is an important tool to help the tax authorities around the world cooperate in accordance with the framework of the Organization for Economic Co-operation and Development (OECD), the G20 group regarding Inclusive Framework on Base Erosion and Profit Shifting, which aims to prevent the migration of tax bases of multinational corporations, and the Global Forum on Transparency and Exchange of Information for Tax Purposes, which sets standards for the exchange of tax information between countries to allow tax authorities to utilize information that is exchanged under the MAC agreement. Thailand’s participation in the MAC agreement expands its network of parties in the exchange of tax information, from the previous 60 parties under the Double Tax Agreement (DTA) to more than 130 countries under the MAC agreement, demonstrating Thailand’s commitment to international cooperation.
Mr. Ekniti added that the Revenue Department is in the process of bringing the signed MAC agreement to Parliament for consideration and ratification. Exchanging information under the MAC agreement will help the Revenue Department obtain data to analyze the tax behavior and risk of multinational entrepreneurs and help promote tax fairness, such as through e-Service laws, which will lead to the increased competitiveness of domestic entrepreneurs and an expanded tax base, thereby benefiting the country.