Withholding tax certificate for overseas vendors
If you are a company operating in Thailand and pay overseas vendors for services, you will have to withhold some tax from the payments and submit it to the Thai Revenue Department within the 7th of the following month using form P.N.D. 54. The tax rates depend on the double taxation treaty between Thailand and vendors’ countries. If there is no such treaty, tax rate will be as stipulated in Thailand Revenue Code. Within the same period, paying to overseas suppliers, it also has to submit VAT return, form P.P. 36, which is the form that you submit 7% VAT on behalf of the vendor overseas. After you withhold the tax from the payment you make to the foreign vendors, sometimes you are requested by them to issue a withholding tax certificate for overseas vendors so that they can use the amount of tax withheld by you as a proof of their prepaid income tax.
How to get a withholding tax certificate for overseas vendors: You will have to get the withholding tax certificate in English from the Revenue Department and send it to them so they can use their tax credit in their country. The process will take 10-15 business day. You, as the payer, have to submit the following documents to Regional Revenue Office.
- A copy of the filed withholding tax return i.e. P.N.D 54. and VAT return, P.P. 36
- A copy of tax receipt issued by the Revenue Department
- A copy of document indicating overseas remittance of payment and exchange rates.
- A copy of service invoice
- A copy of your company affidavit issued not over 1 month
- Power of Attorney
- Other relevant documents, such as copy of royalty agreement, passport or ID card copy of the authorized signatory and the agent’s.
Contact MSNA your Thailand accountant for tax and accounting needs.
Thailand inheritance tax and gift tax
Thailand inheritance tax and gift tax will start taking effect on 1 February, 2016. It is the first inheritance tax law in the country. 5% for ascendants or descendants and 10% for others are to be levied on inherited assets worth more than Baht 100 M. In order to prevent avoidance of the newly announced inheritance tax, Thailand gift tax is also introduced by amending the types of tax exempt income in the Thai Revenue Code. The gift tax will be enforced on the same day as the Inheritance Tax.
The inheritance tax is levied on heirs, both individuals and juristic persons. It is also applied to non-Thai nationals who are considered residents in Thailand according to Thailand immigration law and non-Thai inheriting assets which are located in Thailand.
The gift tax: Before 1 February 2016, the types of income exempt from personal income tax include income derived from maintenance, income derived from moral obligation, inheritance or a gift received in a ceremony or on other occasions in accordance with established custom. However, starting from 1 February 2016, only the following types of income are exempt from personal income tax:
1. The portion of inheritance income not more than Baht 100 M;
- Income derived from the transfer of ownership or possessory right in an immovable property without consideration by the parent to a legitimate, non-adopted child, only for the portion not more than Baht 20 M per tax year;
- Income derived from maintenance or gift from ascendants, descendants or spouse, only for the portion not more than Baht 20 M per tax year;
- Income derived from maintenance under moral purposes or gift received in a ceremony or on occasions in accordance with custom and tradition from persons who are not ascendants, descendants or spouse, only for the portion not more than Baht 10 M per tax year; and
- Income from gift received for use for religious, educational or public purposes according to the rules and conditions under a ministerial regulation yet to be issued.
For the taxpayers receiving income stated in No. 2 to 4 above, which exceeds the thresholds, may choose to pay tax at the rate of 5% and do not have to include those incomes in their annual personal income tax calculation/filing.
Consult with MSNA for your Thailand accounting and tax needs.
Exemption for tax audit by the Thai Revenue Department
The businesses in Thailand welcomed a new law announced by the Thai government on 1 January 2016 that they may be eligible for being exempt from an audit by the Revenue Department on their income incurred within the accounting periods beginning before 1 January 2016. Here are the conditions:
- Being a company or juristic partnership that did not have gross income exceeding THB 500 Million in the accounting period of 12 months ended within 31 December 2015;
- Being a company or juristic partnership that is not being audited by the Revenue Department before 1 January 2016; and
- Not being a company or juristic person that issues or uses fake VAT invoices or presents false expenses to the Revenue Department.
What do you have to do to enjoy this measure?
The company or juristic partnership must register for this measure on the website of the Thai Revenue Department between 15 January to 15 March 2016.
After the registration on the website, the company or juristic partnership must:
- prepare its accounts and financial statements to reflect the real position of its business operation from the accounting period beginning on or after 1 January 2016;
- file all tax returns applicable to its operation and submit taxes and duties completely from 1 January 2016 onward; and
- not do anything to avoid paying taxes and duties.
If you do not fully comply with the above, the Revenue Depart will have the right to audit you.
Please note that even though your company has complied with all the above, if you seek a tax refund, the Revenue Department is empowered by the law to audit you for the purpose of processing the tax refund.
Consult with MSNA for your accounting and tax needs in Thailand.
Thailand corporate income tax rate reduction for 2016 and 2017
The Government just announced Thailand corporate income tax rate reduction for 2016 and 2017 for SMEs. In order to be eligible for the 2016 and 2017 reduced corporate income tax rates, the SMEs must meet the following conditions:
- Being a company or juristic partnership registered (or in other words, established) before 1 January 2015;
- The paid-up capital on the last day of any accounting period must not exceed THB 5 million; and
- The income from the sale of goods and provision of services must not exceed THB 30 million in any accounting period.
- The SME must register for this corporate income tax reduction on the website of the Thai Revenue Department between 15 January to 15 March 2016.
The following corporate income tax rates apply:
- For the accounting period beginning between 1 January and 31 December 2016 – 0% tax.
- For the accounting period beginning between 1 January and 31 December 2017, – 0% for the net profit of Baht 300,000 and 10% for the amount beyond 300,000
Contact your Thai Accountant at MSNA for any questions on accounting and tax in Thailand.