Withholding Tax (WHT)

|Withholding Tax (WHT)

Withholding tax (WHT) is levied on certain types of income of natural and juristic persons. It is not a tax per se, but rather a special form of tax collection.

The withholding tax rates depend on the types of income and the tax status of the recipient. However, not all outward payments are subject to withholding tax, only expenses greater than 1,000 Baht and expenses lower than 1,000 Baht for which there is a long-term contract in place (telephone, Internet, etc.).

A Thai company which pays taxable income to individuals/companies is required to withhold the appropriate tax amount at the time of payment, file the return and submit the amount of tax withheld to the District Revenue Office within 7 days of the following month in which the payment is made. Failure to file or late submission may subject the taxpayer of a fine of 200 Baht per each form plus 1.5% on the amount of the taxes owed per month.

The taxpayer receives a Withholding Tax Certificate, which serves as a proof of the payment of the withholding tax. This certificate can be used as credit against the year-end tax return.

Individual Taxpayer
The following types of income are subject to withholding tax:
• Income from salary and wages: 0-35% on the amount of salary or wage paid
• Income from services provided (fees, brokerages, meeting fees and commission fees): 0-35% on the amount of income or 15% if the recipient of income is a non-resident individual
• Income from interest: 15% of the payment
• Income from dividends: 10% of the payment
• Income from rent: 5% of the payment
• Income from prizes: 5% of the payment
• Income from liberal profession (laws, arts of healing, engineering and architecture): 3% of the payment or 15% of the payment if the recipient of income is a non-resident individual
• Income from a contract of work and labor, whereby the contractor provides essential material besides tools: 3% of the payment
• Income from royalties:0-35% on the amount of royalty paid or 15% if the recipient of income is a non-resident individual

At the end of the year, each taxpayer has to submit a tax computation of all income generated during the year to the Revenue Department. The Revenue Department is calculating the taxable income, deducting the tax already withheld during the year. The taxpayer might make an additional payment or receive a payback, depending on how much tax was withheld.

Taxpayers earning income in the form of interest or dividend can elect to include or not include this or not in the tax calculation. The tax withheld shall then be credited against tax liability at the time of filing the PIT return.

Corporate Taxpayer
Certain types of income paid to companies are subject to withholding tax at source.

A Thai Company submitting payments to another Thai Company is not required to withhold income tax except for the following cases:
• Income from services provided (fees, brokerages, meeting fees, and commission fees): 3% of the payment
• Income from interest: 1% of the payment paid to a Thai company or0% of the payment paid to a Thai bank
• Income from dividends: 0% or 10 %
• Income from rent:5% of all rental payments made or 10% of rental payments made to associations and foundations
• Income from prizes:5% of the payment
• Income from liberal profession (laws, arts of healing, engineering and architecture): 3% of the payment
• Income from payments to contractors who provide essential materials besides tools:3% of the payment
• Income from royalties: 3% of the payment
• Income paid by Government Agency: 1% of the payment
• Income paid from the sale of goods: 0% of the payment

Foreign companies which are carrying on business in Thailand (by having a branch office, employment, representative or go-between in Thailand and deriving income in Thailand) are generally subject to Thai income tax and payers of such companies are thus required to withhold income tax, as following:
• Income from services provided (fees, brokerages, meeting fees, and commission fees):5% of the payment
• Income from interest: 1% of the payment
• Income from dividends: 10% of the payment
• Income from rent: 5% of the payment
• Income from liberal profession (laws, arts of healing, engineering, and architecture):3% of the payment
• Income from payments to contractors who provide essential materials besides tools: 5% of the payment or 3% of the payment if such foreign contractor has a permanent branch office in Thailand
• Income from royalties: 3% of the payment
• Repatriation of profits:10% of the after-tax profits paid or deemed paid from the branch in Thailand to the head office. The only exception is Hong Kong, due to the Thailand-Hong Kong Tax Agreement.

A foreign company not carrying business activities in Thailand is subject to withholding tax only on certain categories of income (interest, dividends, royalties, rents and service fees) obtained in Thailand. The rate of tax is generally 15%. Dividends are subject to 10% WHT, but exemptions apply in some cases (dividends paid out of profits are subject to tax holidays).

Under a double taxation agreement (DTA), the withholding tax rate might be lower. For example, a lender that is a resident of a country that has a tax treaty signed with Thailand must pay a 10% withholding tax rate on interest paid on loans from banks, financial institutions or insurance agencies. If the loans are granted under a law intended to promote agriculture, industry, or commerce and the interest is paid by the government or a Thai financial institution, the lender may obtain a withholding tax exemption.

2018-07-28T06:31:48+00:00
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