Withholding Tax Services in Thailand


Owning and managing a business in Thailand requires compliance in several tax requirements that conforms to the country’s rules and regulations. Our team of accounting specialists can help you navigate the complexity so that you can remain focus on your business and avoid hefty penalties and fines.

What is a Withholding Tax?


Withholding Tax or WHT is a deduction from payments given to the company’s service providers. This also applies to the payment of interests and dividends.

Withholding tax rates are dependent on the income type and tax status of the recipient. Bear in mind that not all outward payments are subjected to WHT.

Payments to service providers amount to 1000 THB and payments less than 1000 THB to long-term contractors, such as telephone and internet companies, are subject to withholding tax. Exceptions include payments to non-taxpayers such as BOI companies and governmental organizations.

Tax Rate for Corporate Taxpayers


A company is required to submit tax returns in the following situations.Withholding Tax Thailand

  1. When the company earns a professional fee for services rendered (brokerage, commission, meeting fees, etc.)
  2. If there is income earned on interest (1% of the payment to another company)
  3. Dividends (between 0% and 10%)
  4. Income from rent (between 5% and 10%)
  5. Royalty income (3%)
  6. Income from a government agency (1%)

Tax Rate Foreign Company


There are two classifications in computing taxes for a foreign company:

It covers companies that derive income in Thailand even if they do not have headquarters, employment, or representatives in the country. They are covered by Revenue Code Sec. 40, which means they are still subject to an income tax.
  • Income for professional fees, meeting fees, brokerages, and commission, etc. (15%)
  • Income on interest and dividend (15% and 10%, respectively)
  • Rental income (15%)
  • Royalty income (15%)
  • Income derived from a liberal profession such as law, architecture, engineering, etc. (15%)
For foreign companies with parent headquarters located in countries where Thailand has a Double Taxation Agreement (DTA), the rate of withholding tax may be lower. For instance, the existing DTA between Thailand and Germany means that the income derived on interest is reduced to zero if the lender is a German bank. In the occasion that the Thai company’s stock is sold by a German firm, the capital gains are not subject to any levy.
This refers to a company with a branch in Thailand, as well as a representative, employee, or a go-between stationed in the country. The foreign company is covered by Revenue Code Sec. 40.
  • Income for professional fees, meeting fees, brokerages, and commission, etc. (5%)
  • Income on interest and dividend (1% and 10%, respectively)
  • Rental income (5%)
  • Income derived from a liberal profession such as law, architecture, engineering, etc. (3%)
  • Payment to contractors (5%)
  • Payment to a foreign contractor with a permanent office in Thailand (3%)
  • Royalty payment (3%)
  • Repatriation of earnings (10% of the amount paid by a Thai company to a foreign entity)
Apart from the withholding tax, international companies with businesses in Thailand would have to pay corporate income tax. The rate is 20% of the net profit. However, they can compute the amount of tax withheld and count it as a credit against their income tax.

Calculation of Income Tax


When computing the tax rate, the net of VAT is used.

If the company pays a net rent of 100,000 Baht with a net VAT rate of 7%, the total VAT would be 7,000 Baht. You add that amount to your net rental income, and you get the total amount of 107,000 Baht.

The withholding tax is computed from the gross amount of 107,000 Baht. With the 5% tax rate from rental income, the total tax withheld is 535 Baht.

Table of Income Type and Withholding Tax Rate


TYPES OF INCOMEWHT
Royalties3%
Dividends10%
Interest1%
Fees for advertising2%
Prizes5%
Professional fees/Services5% if paid to a foreign business with no permanent headquarters in Thailand
3% if paid to a Thai business or a foreign company with permanent headquarters in Thailand

Withholding Tax Submission


All businesses in Thailand are required to submit their income tax returns to The Revenue Department within the seventh day of the succeeding month when the payment was made. For instance, if the payment was made on Sept. 16th, 2019, the withholding tax should be submitted to The Revenue Department by Oct. 7th, 2019.

Penalty


Businesses that fail to submit tax returns within the deadline will face fine. The penalty is 100 Baht within the first week after the deadline date and 200 Baht after the first week. They will also be charged with an additional penalty each month, calculated as 1.5% of the unpaid amount.