Withholding tax is a deduction from payments made to suppliers who provide a service. The withholding tax rates can vary depending on the types of income and the tax status of the recipient.
However, not all outward payments are subject to withholding tax. It is only expenses greater than 1,000 THB and expenses lower than 1,000 THB for which there is a long-term contract in place (telephone, Internet, etc.). Other exceptions are payments made to non-taxpayers, such as governmental organisations or BOI companies.
Advertising Fees 2%
Service and professional fees 3% (paid to a Thai or foreign company having a permanent branch in Thailand)
5% (paid to a foreign company not having a permanent branch in Thailand)
Calculation of withholding tax
Sample: A company is making a 10,700 Baht gross payment (including VAT) to an accounting firm for its services.
- The withholding tax is calculated net of VAT (Net = 10,000 Baht)
- VAT 7% = 700
- The Withholding tax rate for the services is 3% (WHT = 300)
- Total amount to be paid to the accounting firm is (10,000 + 700) – 300 = 10,400 Baht and the payer will have to issue the withholding tax certificate (of 300) a proof of the deduction to the payee.
Submission: Companies withholding taxes for other firms, employees or other entities have a duty to submit the money to the Revenue Department within first 7 days of the following month in which the payment is made.
Late submissions are penalized: + 1.5% interest on the amount of the taxes owed per for that month.
See Thailand Corporate Income Tax here
Source: Revenue Department