Key takeaways
- A loan within the group needs a business rationale, an agreement, an interest rate, repayment terms and accounting entries that match on both sides.
- An interest-free loan may be assessed as income at market value under Section 65 bis (4), and SBT depends on the shareholding relationship.
- Before moving any money, check the terms of the project loan agreement, because some agreements prohibit an SPV from lending or paying a shareholder loan.
Three questions before transferring money
- Who lends, who borrows, for what purpose, and from which source of funds will it be repaid?
- Are the lender and the borrower permitted to enter into this transaction under the project loan agreement?
- If the lender were an independent party, would it lend on these terms?
Tax rules to know
| Issue | Principle | Action |
|---|---|---|
| Below-market or interest-free interest | Section 65 bis (4): the assessing officer may assess at market value | Set the rate and keep evidence of how it was priced |
| Transfer Pricing | Section 71 bis: related-party prices are adjusted under the arm's length principle | Keep the benchmark and the rationale |
| TP Disclosure Form | Revenue above THB 200 million: file within 150 days after the period end; online filing is extended by 8 days | Set a filing calendar |
| TP documentation | PwC summarises: keep for 5 years and submit when requested, normally within 60 days, or 180 days for a first request, and it must be in Thai | Prepare before being called |
| Penalty for the disclosure form | Up to THB 200,000 for failure to file or incorrect filing | Separate from the tax being adjusted |
| WHT on interest | Thai company paying a non-bank Thai company: 1% | Issue a withholding tax certificate every time |
| SBT on interest | May be payable at 3.3% of interest received | Check the exemptions every time |
| Stamp duty on loan agreements | THB 1 per THB 2,000, up to a maximum of THB 10,000 per instrument | Affix stamps or pay in full |
| Thin Cap | No general rule, but it may be a condition of privileges or of specific businesses | Check BOI conditions and loan agreements |
Relationships under TP are wider than direct shareholding. They include direct or indirect shareholding of 50% or more, and cases where one entity depends on the capital, management or control of another so that it cannot operate independently. Check the current definition with the Revenue Department.
SBT exemption for loans between group companies
Royal Decree No. 571, which according to Forvis Mazars' summary applies retrospectively to 1 January 2012, exempts from SBT the interest that a company not engaged in banking or the specified financial businesses earns by lending to an affiliated company, where one company has held at least 25% of the voting shares of the other for no less than 6 months before making the loan.
Qualifies
Holding has owned 100% of the SPV for more than 6 months and lends to the SPV
Risk of not qualifying
Sister SPVs lending to each other, an SPV set up less than 6 months ago, or a company holding less than 25%
Using the Holding as a conduit to avoid SBT is risky. An article in The Nation cites Supreme Court Judgment No. 12127/2015, in which the court considered internal records, financial position, loan terms, security, repayments and commercial rationale, and held the arrangement to be tax avoidance. There should therefore be a genuine business rationale, and the consideration should be consistent with the functions and risks the Holding bears.
Assessing interest at market value
A legal article by Siam Legal describes the assessment approach as follows. Use it as a starting point and check it with a tax adviser before relying on it.
| Lender's source of funds | Reference rate |
|---|---|
| Own funds | Savings deposit interest rate on the date of the loan |
| Borrowed funds | Loan rate on comparable terms on the date of the loan |
| Source of funds unclear | Loan rate on the date the lender first borrowed the money |
Some documents state that failing to prepare TP documentation carries a penalty of 100% of the adjusted tax. This does not match the penalty for the disclosure form. A price adjustment may result in additional tax payable together with surcharges or penalties under the law, which must be considered case by case.
Example: Holding lends THB 100 million to an SPV for 1 year
Assume a rate of 6.0%, from a borrowing cost of 5.5% plus a 0.5% margin. The figures are illustrative.
| Item | Calculation | THB |
|---|---|---|
| Interest | 100,000,000 × 6.0% | 6,000,000 |
| WHT | 6,000,000 × 1% | 60,000 |
| Net cash received by the Holding | 5,940,000 | |
| Stamp Duty | 100,000,000 ÷ 2,000 = 50,000 but capped at | 10,000 |
| SBT if not exempt | 6,000,000 × 3.3% | 198,000 |
| CIT of the Holding on interest received | 6,000,000 × 20% before deducting costs | 1,200,000 |
If the loan is interest-free and is assessed, the Holding may have additional income of THB 6,000,000 without receiving any cash, while the SPV has no actual interest expense to deduct. The THB 1.2 million may therefore become an extra burden on the group because there is no group relief.
How to set the interest rate
- Cost-plus: the lender's cost of funds plus a margin that reflects risk and functions
- Comparable: compare with loan rates of independent parties on similar terms, taking into account tenor, security and ranking of the debt
- Credit rating: assess the borrower's credit and then compare the spread
- Statutory ceiling: Section 654 of the Civil and Commercial Code limits interest on general loans to no more than 15% per year
What the agreement must contain
A loan of more than THB 2,000 must be evidenced in writing signed by the borrower under Section 653 before it can be enforced in court
- Parties, facility amount, purpose and project
- Drawdown and repayment, including payment dates
- Interest rate, calculation method and penalties
- Ranking of debt and subordination, if the bank requires it
- Conditions before repayment, such as passing the covenant
- Approval resolution under the delegation of authority table, and signatories with no conflict of interest
- WHT deduction and payment of stamp duty
Cash Pooling
Physical Pooling
Physically transferring actual balances into a central account gives good control, but every transfer creates an intercompany loan balance and brings documentation, tax and TP burdens
Notional Pooling
The bank calculates interest on the net balance without moving the money. This has limited use, and tax and the bank's conditions should still be checked
Customer money and accounts controlled by the bank should not go into the pool. Pool design should start only from accounts holding unrestricted funds
Transaction controls
- Intercompany loan register: record the opening balance, interest, WHT, stamp duty and repayment date
- Reconcile both sides every month. If the balances do not agree, correct them before closing the books
- Review the lender and the 25% shareholding before every new drawdown
- Assess the borrower's ability to repay, and credit loss issues under the applicable standard
The tax information was checked against the cited sources as at Nov 2026. Rules may change, and some points are advisers' summaries. Check with the Revenue Department or a tax adviser before acting.