20 September 2022
On 3 June 2020, Thailand has become a signatory to the Multilateral Convention on mutual Administrative Assistance in Tax Matters (“MAC”), which is a treaty facilitating the exchange of information to combat tax evasions and avoidances (the exchange of information is also included in the bilateral double tax treaties, however, in more limited scope), and ratified such convention on 22 December 2021. The automatic exchange of information (“AEOI”) under Article 6 of MAC is a basic exchange of information, in which a rough information of the financial accounts in Thailand held by tax residents of the signatory jurisdictions will be collected and automatically sent from the Thai Revenue Department to the tax authorities of such jurisdictions on the annual basis, and vice versa. In order to implement AEOI, and any other method of information exchange under MAC, such as the Exchange of Information on Request (“EOIR”), the followings are still under the to-do list of the Thai government:
a. To implement AEOI, Thailand will need to sign the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (“MCAA CRS”), which provides the details of AEOI’s frameworks, e.g. information to be exchanged, timing, confidentiality and collaboration on compliance and enforcement. The joint sitting of the National Assembly held on 6 September 2022 has approved Thailand’s signing of MCAA CRS.
b. To collect necessary information under AEOI and EOIR, and to require the possessor of information to supply the Thai competent official with the information, and to lay down the scopes and conditions for the exchanges, domestic legislation will be required. A public hearing for the draft bill for Exchange of Information in Compliance with Inter-jurisdictional Treaties Regarding Taxation B.E…. (“Draft Bill”) was held during 24 August – 7 September 2022. This Draft Bill was amended from the prior one, which was reviewed in the public hearing during 7 – 23 August 2021.
The Draft Bill lists out the type of financial institutions, e.g. banks, security companies, life insurance companies, derivative business operators and trustees, which are required to collect and submit the annual information in respect of the accounts held by the tax residents of the jurisdictions signatory to MCAA CRS to the Thai Revenue Department by 30 June of the following year for AEOI purposes.
As for EOIR, the Draft Bill authorizes the Thai competent authority to provide information requested by a signatory jurisdiction, only if the information to be exchanged is (i) from the requesting jurisdiction’s point of view, relevant and useful from the tax administrative, tax collection and tax law enforcement point of views; and (ii) being relevant to the person who is under tax audit, investigation, legal action or legal enforcement by the requesting jurisdiction, or being the information of the person related to such person. The exchange of information under EOIR will not take place if the request made by the signatory jurisdiction lacks minimum contents, e.g. type and format of the requested information, tax matters that trigger necessity to request for the information, reason to believe that the requested information exists in Thailand and identification of the person believed to possess the information. Further, the Draft Bill does not allow the Thai competent authority to exchange the information under some specific circumstances, e.g. there is a reason to believe that the exchange could reveal secrecy in trade, business, industry, commerce or profession, or there is a reason to anticipate that the requesting jurisdiction will not be able to protect confidentiality of the exchanged information.
By virtue of Annex B of MAC, the Thai competent authority, who is authorized to exchange the information under the Draft Bill will be the Ministry of Finance. The Draft Bill also authorizes the Ministry of Finance to handover the information obtained from the signatory jurisdictions to the tax assessment officials under the Thai Revenue Code, Thai Petroleum Income Tax Act or the laws related to any other taxes that will be announced by the Ministerial Regulation.