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.
|Type of income||Withholding Tax Rate (1)|
|Royalties in Thailand||3%|
|Royalties out of Thailand||15%|
|Office or Equipment rental||5%|
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.
- Requirement to deduct withholding tax doesn’t systematically appear on invoices.
- Even if not deducted, you still have the obligation to pay the withholding tax to the Revenue Department.