What is a Withholding Tax in Thailand ?

WHAT IS A WITHHOLDING TAX (WHT) IN THAILAND ?

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 (WHT) rates are dependent on the income type and tax status of the recipient.

*** Rates of international payments withholding tax in Thailand are stated in Section 70 of the Revenue Code, as lowered or exempted by Thailand Double Tax Agreement.

Withheld Tax (WHT) rates under Thailand local tax regulation

As prescribed in Section 70 of the Thailand’s Revenue Code law – when a payer in Thailand pays specified types of income to a corporate entity established under a foreign law and not carrying on business in Thailand the payer shall withhold tax from the payment and remit it to the Thailand Revenue Department.

The particular income payments types and their corresponding withholding tax Thailand rate are as follows:

International payments of share or dividend of revenues income: 10% WHT
International payments of services earnings, rights or royalty earnings, interest earnings, capital gains earnings, property rental profits and income from professional services: 15% WHT

Withholding tax rates as decreased or exempted by Thailand Double Tax Agreement (DTA)

Royal Decree (No 18) issued under the Revenue Code prescribes, there shall be exemption from tax under the Revenue Code to persons entitled thereto under Agreements for the Avoidance of Double Taxation.

The tax under Section 70 is for payments made to a corporate entity established under a foreign law that does not carrying on business in Thailand, and for such payments, Thailand’s Double Tax Agreements generally prescribe as follows but each particular DTA must be referred to for what’s specified therein:

■ International payments of services earnings:

The Double Tax Agreement Business Profits Articles stated that tax is only payable in the country of residence. Thus, there will be an exemption from the 15% WHT under Section 70.

■ International payments of interest income:

If the interest income payment is to an insurance company or financial institution in the DTA country, there will be a reduction of 15% WHT. On the other hand, if the interest income payment is not to these entities in the DTA country, there will be no 15% reduction.

■ International payments of rental of property earnings:

If the income is paid for renting an immovable property located in Thailand, no reduction of WHT will be made. However, if the income is paid for the rental of movable property located in the country, the WHT rates will be specified in the Royalty Article for the Equipment Royalty’s payment.

■ International payments of professional services fee:

The Independent Services Articles in the DTAs stated something similar to the Business Profits Articles. Hence, there will be an exemption from the 15% WHT.

■ International payments of capital gains earnings:

If the capital gains earnings are taken from an immovable property’s alienation located in Thailand, no reduction of the 15% WHT will be made. If the capital gains incomes are taken from the alienation of property in the country other than the above, then there will be an exemption from the 15% WHT. Similarly, if the capital gains income is taken from the alienation of shares in a company in Thailand, there will be an exemption from the 15% WHT.

■ International payments of rights or royalty income:

DTAs that specify one same tax rate for distinct types of royalty payments in the DTA will have no reduction of the 15% WHT. เท contrast, DTAs which specify distinct tax rates for every type of royalty payment in the agreement will have 5% WHT if the payment is for a Copyright Royalty, 8% WHT if the payment is for a Patent Royalty, 10% WHT for a Know-How Royalty, and 8% WHT for an Equipment Royalty.

Submission of the deducted withheld tax WHT.

The withheld tax will be paid to the Thailand Revenue Department within the seventh day of the following month. For instance, a payment made on the 20^th of May to a supplier will need to give the withheld tax to the Revenue Department by the 7^th of June.

Late submission penalty Of Withheld Tax (WHT).

The fine for late submission includes THB 100 within the first seven days, and THB 200 after seven days. An extra penalty of 1.5% of the outstanding amount will be calculated every month.