What is withholding tax?
Withholding tax is a tax collected at the source of income.
The tax agent responsible for paying the tax is the person who pays for services and certain other payments to individuals or legal entities. The payer must deduct the tax amount from the payment due to the recipient and remit it on behalf of the recipient to the tax authority.
The amount paid in this way will be credited as part of the recipient’s corporate income tax or personal income tax when filing the annual tax return. If the income recipient is a non-resident of Thailand, the withholding tax is final and not subject to further recalculation.
Who withholds the tax and how?
The tax rate depends on the type of income and the tax status of the recipient. The company paying for services must file a tax return (form CIT 53), withhold the tax amount, and remit it to the district tax office within seven calendar days following the month in which the payment is made. The withheld tax will be credited as a tax credit when calculating the taxpayer’s final tax liability.
The following are the withholding tax rates for certain important types of income:
Income | Resident | Non-resident*
- Service fees — 3% | 15%
- Interest — 1% | 15%
- Dividends — 10% | 10%
- Rental income — 5% | 15%
- Professional services income — 3% | 15%
- Contractor payments — 3% | 15%
- Royalties — 3% | 15%
- Advertising — 2% | 15%
- Salary — 0–35% | —
- Cryptocurrency income — 15% | 15%
If the recipient is located in a country that has a Double Taxation Agreement (DTA) with Thailand, the provisions of the DTA should apply. Such agreements exist with Russia, Ukraine, Belarus, Uzbekistan, Turkey, the USA, the UAE, and many European countries.
Specific features of withholding tax
Withholding tax is deducted from payments for services, interest, dividends, royalties, rent, etc. It is not deducted when paying for goods.
The payer is responsible for remitting the tax and providing the recipient with proof of payment.
By withholding tax from payments made to non-residents, taxes are collected on income earned by foreign persons in Thailand. The rates apply in all cases except when dealing with foreign persons who are residents of countries that have signed a Double Taxation Agreement with Thailand. Such agreements prevail.
Salary tax is also a type of withholding tax but has specific calculation rules. Monthly salary tax is calculated based on the progressive tax table.
Author: Alexandra Agapitova.
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