Withholding Tax

The withholding tax system is unique to Thailand. Also known as Service Tax, referring to its source, tax on services.
Basically the withholding tax is a prepayment on the Corporate Income Tax. The withholding tax is not an expense other than the administration you have to do for it.

Withholding tax how does it work?

• When you invoice your client for services, your client will deduct 3% of the total invoice amount exclusive VAT. Your client will remit a receipt (Form CIT53) to you for the deducted amount. You file and book the paid withholding tax as a prepayment on your, end of period, payable Corporate Income Tax.
  At year-end you consider all withholding tax that have been deducted by your clients as prepaid Corporate Income Tax.
  
• When you receive an invoice for services, you are obliged to pay 3% withholding tax, calculated over the purchase amount excluding Vat, to the revenue department. You send a filled out withholding tax receipt (Form CIT53) to your vendor and you pay your vendor the invoice amount including Vat but excluding the withholding tax.
  The amount of tax withheld should be submitted to the District Revenue Offices within seven days of the following month in which the payment is made.

Withholding Tax tariffs

• On Service and professional fees
  
  • 3% if paid to Thai company or foreign company having a permanent branch in Thailand
    
  • 5% if paid to foreign company not having a permanent branch in Thailand
    
• On Advertising Fees 2%
  
• On Dividends 10%
  
• On Interest
  
  • 10% if paid to associations or foundations
    
  • 1% in all other cases
    
• On Royalties
  
  • 10% if paid to associations or foundations
    
  • 3% in all other cases