Tax Ruling Services Provided Outside Thailand

Company A, which is incorporated under Thai law, wished to use the services of signal compression and signal transmission to satellites.

Keywords: Mazars, Thailand, Tax, VAT, WHT

13 November 2013

Therefore, Company A entered into a service agreement with Company B, which is incorporated under Laotian law and has no active business operations in Thailand.

In respect of the withholding tax implications, the Revenue Department ruled that Company B renders its services to Company A outside Thailand. Income from such services is specified as a business profit paid from Thailand to abroad. Such income is not subject to corporate income tax. As a result, Company A is not required to withhold tax at source under Section 70 of the Revenue Code on the payment of such service fees.

In respect of the value added tax (“VAT”) implications, it is also clear that the services were performed outside and used in Thailand and the fee was paid to a foreign company, which has no active business operations in Thailand. The service fee is, therefore, subject to VAT.

Company A is responsible for remitting VAT on this service fee to the Revenue Department. However, the remitted VAT was deemed as purchase VAT of Company A and the receipt issued by the Revenue Department for the remitted VAT was also deemed as a tax invoice. Thus, Company A had the right to deduct remitted VAT from sales VAT in its VAT calculation.