Withholding Tax in Thailand | Forvis Mazars

For any business operating in this country, understanding withholding tax in Thailand is essential. From local enterprises to international companies setting up operations here, getting to grips with this tax mechanism helps ensure compliance with Thai Revenue Department regulations—and avoids costly penalties down the line

What is Withholding Tax? 

Withholding tax (WHT) is a system where the payer deducts a portion of tax from payments made to suppliers, service providers, or employees before remitting the balance. The withheld amount is then submitted to the Revenue Department on behalf of the payee. 

So, how does withholding tax work in Thailand? Let's say your company hires a graphic designer to create marketing materials for THB 50,000. Rather than paying the full amount, you deduct 3% (THB 1,500) as withholding tax and pay the designer THB 48,500. You then issue a withholding tax certificate to the designer, who can use it to offset their annual income tax. Meanwhile, you submit the THB 1,500 to the Revenue Department by the 7th of the following month. 

This system serves several important purposes. It ensures the government receives tax revenue throughout the year rather than waiting for a single annual payment. It also reduces the risk of tax evasion by creating traceable payment records, and it allows taxpayers to spread their tax burden across multiple instalments. 

When Does Withholding Tax Apply? 

Obligations for withholding tax in Thailand arise when payments exceed THB 1,000 for qualifying expenses. For long-term contracts where individual invoices fall below this threshold but accumulate to more than THB 1,000 annually (such as monthly telephone or internet bills), WHT must still be applied. 

Payments requiring WHT deductions include professional services, rent, royalties, dividends, interest, advertising fees, and transportation costs. Certain payments are exempt, however, including those made to government entities, BOI-promoted companies, and purchases of goods rather than services. 

Common Withholding Tax Rates

 Notes:

(*) Not including fare for public transportation.

(**) Rates are applicable for resident corporations and branches of foreign companies. For payments to individuals, associations and foundations or a foreign company with no permanent residence in Thailand different rates may apply.

When calculating the amount to pay the WHT deduction is calculated net of VAT.

For example:

How to Calculate Withholding Tax in Thailand 

Once you know the applicable rates, learning how to calculate withholding tax in Thailand is fairly straightforward. The key point to remember is that WHT is calculated on the net amount before VAT. 

Practical Example: 

Your company engages a law firm for legal advisory services. The invoice breaks down as follows: 

• Net service fee: THB 100,000 
• VAT (7%): THB 7,000 
• Gross total: THB 107,000 

Since legal services attract a 3% withholding rate, you calculate WHT on the net amount: 

• WHT (3% of THB 100,000): THB 3,000 
• Amount payable to the law firm: THB 104,000 

The THB 3,000 you withheld gets remitted to the Revenue Department, and the law firm receives a certificate to credit this against their corporate income tax liability at year-end. 

Filing Deadlines and Penalties 

Companies must submit withheld taxes to the Revenue Department by the 7th day of the month following payment. For instance, payments made in August require WHT submission by 7th September. 

Businesses registered for e-filing receive an additional eight days to submit their returns. 

Late submission penalties include: 

• THB 100 fine if filed within seven days after the deadline 
• THB 200 fine if filed more than seven days late 
• Additional monthly penalty of 1.5% on outstanding amounts 

Frequently Asked Questions 

Who is responsible for deducting withholding tax in Thailand?  

The payer - meaning the company or individual making the payment - is legally responsible for deducting WHT, issuing a certificate to the payee, and remitting the tax to the Revenue Department. 

How does withholding tax work in Thailand for goods versus services?  

Rules for withholding tax for Thailand apply only to service-related expenses, not purchases of physical goods or products. If you're buying inventory or materials, no WHT deduction is required. 

What happens if I fail to deduct withholding tax in Thailand?  

The payer remains liable for the unpaid WHT, plus penalties and surcharges. The Revenue Department may also pursue enforcement action for non-compliance. 

Can withheld tax be claimed back?  

Yes. The payee can use the withholding tax certificate to offset the amount against their annual income tax liability. Any excess may be refunded upon filing their return. 

Are there reduced rates for withholding tax Thailand offers to foreign companies?  

Potentially, yes. Thailand has double tax treaties with numerous countries that may provide reduced rates for cross-border payments, including dividends, interest, and royalties. 

How to calculate withholding tax in Thailand for salary payments?  

Employers must calculate WHT on salaries using progressive personal income tax rates rather than flat percentages. The withheld amount is remitted monthly to the Revenue Department using Form PND 1. 

Where can I learn more about how withholding tax works in Thailand?  

All official forms, rate tables, and guidelines are available on the Revenue Department website at www.rd.go.th. For personalised advice, consulting a qualified tax professional is recommended. 

For professional guidance on withholding tax compliance and broader tax planning in Thailand, contact our taxation specialists.