For many new investors into Thailand, the requirement to deduct withholding tax from payments to domestic suppliers is unfamiliar and frequently confusing. Mazars is here to help.
Certain types of income paid to individuals and companies are subject to withholding tax at source. The withholding tax rates depend on the types of income and the tax status of the recipient. The payer of income is required to file a tax return (Form PND 3 or 53) and submit the amount of tax withheld to the district Revenue Department office within the first seven days of the month following that in which the payment was made. The tax withheld is credited against the final tax liability of the taxpayer.
Remittances made to overseas suppliers may also incur a withholding tax deduction along with a requirement to file a tax return (Form PND 54). However, countries with a Double Taxation Agreement (DTA) with Thailand have different applicable rates. Determining which expenditure is subject to withholding tax is complex and the penalties for non-compliance can be significant.
We will take an active role in your company’s payment process, reviewing the supplier invoices and advising on the amount of withholding tax to deduct before each payment run. Once the payments are made we can prepare the withholding tax certificates and distribute them to your suppliers.
Each month Mazars will:
- Reconcile the withholding tax amount in the withholding tax certificates with the withholding tax amount which has already been recorded in the general ledger of the accounting system.
- Prepare and submit the withholding tax returns and work with the company to coordinate the necessary payments within the required deadline.
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Withholding Tax in Thailand
Withholding tax (“WHT”) is a deduction from payments made to suppliers who provide a service. Whether WHT is applicable and what rate to deduct depends on the nature of the service provided. WHT also applies to interest and dividend payments.