WITHHOLDING TAX IN THAILAND


Withholding Tax (commonly written “WHT”) consists in deducting a tax from payments done to service suppliers. This tax is also applicable to the payment of dividends and interests. When doing a payment, a withholding tax certificate must be provided to the recipient in order to justify the deduction. On the recipient point of view (the service provider), the deduction of the withholding tax constitutes a prepayment of its Corporate Income Tax. Each amount of Withholding Tax deducted therefore constitutes a tax credit of the Corporate Income tax payable the following year. Thus, if you are a service provider, consider that your clients will pay your Corporate Income Tax on your behalf. 

 

How to calculate Withholding Tax?

 

Withholding Tax does not apply to amounts less than THB 1000. However, you are required to deduct this Thai tax whatever the amount if you are linked by a long-term agreement to the service provider. Withholding tax therefore applies when you pay phone or internet bills of your company.

 

Deadlines

 

Payment must be done on the 7th following the month during which the payment has been done.

Fines and penalties for last submission:

✓ Fines: 1.5 % of the payable amount per month
✓ Penalties: 100 THB before seven days / 200 THB after seven days.

 

Exemptions:

 

✓ Companies with a turnover less than 1,8 million baht excepted if a visa or work permit are delivered to foreign employees or directors;

✓ Import of magazine, newspapers or books;

✓ Medical Services;

✓ Service billed by Thai governmental organization;

✓ Transportation;

✓ Educational services;

✓ Imports of certain categories of agricultural products;

✓ Statutory Audit services;

✓ Renting of immovable properties.

✓ Certain cultural services.

 


TYPE OF INCOME

WHT RATES

Services

Non-life insurance

Software

Royalties in Thailand

Royalties out of Thailand

Office or Equipment rental

Advertising

Dividends

Prizes

Water and electricity

Public transportation / air tickets

Life insurance

3%

1%

3%

3%

15%

5%

2%

10%

5%

N/A

N/A

N/A


When calculating the amount to pay the WHT deduction is calculated net of VAT.

 

For example:

 

Service

Net

VAT Rate

VAT 

Gross

WHT Rates

Total WHT

Pay to Supplier

Rent

125,000

7%

8,750

133,750

5%

6,250

127,500

Air Ticket

67,000

0%

-

67,000

0%

-

67,000

Audit

300,000

0%

-

300,000

3%

9,000

291,000

15,250

485,500

Submission to the Revenue Department

 

The WHT deducted is paid to the Revenue Department (“RD”) within the 7th day of the following month in which the payment was made. E.g. a payment made on 28th August 2017 to a supplier will require the WHT deducted to be paid to the RD by the 7th September 2017.

 

The Revenue Department has announced that companies registered for e-filing with have an extra eight days to file all tax returns. This incentive will run until 31 January 2019.

 

Late submission

 

The fine for late submission is:

 

  • 100 baht within the first 7 days
  • 200 baht after 7 days

 

An additional penalty of 1.5% of the outstanding amount calculated monthly.

 

Further sources of information

 

Please visit the Revenue Department website.


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Withholding tax (“WHT”) is a deduction from payments made to suppliers who provide a service. Whether WHT is applicable and what rate to deduct depends on the nature of the service provided. WHT also applies to interest and dividend payments.