A Transfer Pricing Prescription For Thai Pharma Distributors

The global pharma sector presents specific issues and challenges from a transfer pricing perspective. The sector has traditionally exhibited above-average profitability levels. Over the period 2000 to 2018, large pharma companies had a median profitability of 13.8%, which was nearly double the S&P 500's of 7.7%. ¹ Given the high levels of profitability within pharma MNEs, tax authorities around the globe, including the Thai Revenue Department, will be alert to ensuring that they collect a fair share of taxes on pharma profits from the supply chains in their respective countries.

Transfer pricing laws are used by the tax authorities, including the Thai Revenue Department, to ensure that arm's length prices are charged within a pharma MNE group for tangible or intangible transactions. Arm's length prices are prices that would be expected in transactions between independent parties in the same or similar conditions and should ensure that the MNE profits