The withholding tax (“WHT”) is a tax deducted at source from the payment of a service invoice. WHT rates depend on the nature of provided services.
Upon payment of a service invoice, the payer must provide a withholding tax certificate to the vendor to justify the WHT deduction, The purpose of this is that the payer is assisting the Thai gov’t to collect the Corporate Income Tax of the Service Provider in advance. Each amount of Withholding Tax deducted therefore constitutes a tax credit of the Corporate Income tax payable the following year.
How to issue a WHT Certificate
As the payer, you will need to calculate amount of WHT you can deduct from the invoice you have receive. The % of WHT you need to deduct depends on the nature of the services. Please refer to this table for the % you may deduct
Withholding tax rates applicable to Thai resident companies:
| Service | Rate |
|---|---|
| Rent | 5% |
| Rental service fee | 3% |
| Transportation (*) | 1% |
| Advertising | 2% |
| Non-life insurance premiums | 1% |
| Professional fees | 3% |
| Royalties | 3% |
| Interest | 3% |
| Dividends | 10% |
| Prizes / rewards | 5% |
| Water & electricity | No deduction |
| Public transportation / air ticket | No deduction |
Once you know the amount you can deduct, you will then have to calculate the amount of deduction based on the base price. That is the service price before VAT.
For example, if you purchase a Service (which means you can deduct 3%) and the Service fee is THB10,000 before VAT, the WHT is THB300. Once you have establish this amount, you need to complete this form (WHT Certificate) and then you will pay the Service Provider THB9,700 and provide them with this certificate.
After this, you’ll need to submit this certificate to your District Revenue Department and pay them the WHT amount, for this case THB300
Example of WHT calculation:
| Service | Net | VAT Rate | VAT | Gross | WHT Rate | Total WHT | Pay to supplier |
|---|---|---|---|---|---|---|---|
| Rental | 100,000 | exempt | – | 100,000 | 5% | 5,000 | 95,000 |
| Accounting fee | 10,000 | 7% | 700 | 10,700 | 3% | 300 | 10,400 |
| Air ticket | 20,000 | 0% | – | 20,000 | 0% | – | 20,000 |
Withholding tax submission requirement
The WHT shall be submitted to the Revenue Department by the 7th of each month for payments made in the previous month. For instance, the WHT deducted from a payment on the 15th of May shall be submitted to the Revenue Department by the 7th of June.
However, companies registered with the e-filing of the Revenue Department are granted an additional 8 days to file their tax returns, which allows them to submit their WHT by the 15th of the month.
Fines & penalties for late submissions apply as follows:
- Fines: 1.5%/month of the tax due amount.
- Penalties: 100 THB within the first 7 days / 200 THB after 7 days.
If you need any advise on Accounting and Tax obligations in Thailand, please do not hesitate to contact UnionSPACE Accounting and Tax Team. We are happy to assist you to efficiently operate your business in Thailand.
At UnionSPACE, we also offer Visa and Work Permit Services as well as Company Incorporation Service.
Find out more by visiting, www.unionspace.co.th
