Keywords: Mazars, Thailand, Tax, Rental Fee, Lease, Withholding Tax, VAT, Revenue Department
2 June 2016
1. The lessor had registered and paid-up capital of 60 million baht or more.
2. The lessor was registered for VAT.
3. The lease period was for 3 years or longer, except where the leased property was repossessed from another lessee, in which case, the lease period could be for less than three years.
However, the Thai Revenue Department has recently issued Departmental Regulation Number Taw. Paw. 259/2559, which terminates the exemption from withholding tax mentioned above. This new law will apply to rental payments made from 1 June 2016 onward. Therefore, if a company pays a rental fee from that date (whether under a leasing agreement or other rental agreement) to either a company or individual, the lessee company must withhold 5% tax and remit it to the Revenue Department. As a result, this law will have a material impact on the cash flow of companies that provide leasing services.