A Thai company paid some service fee to a company in Japan for debt collection service inside Japan on its behalf. The payment is considered as income from work under section 40 (2) of the revenue code. Because the Japanese company does not have a permanent establishment in Thailand (as prescribed in the double taxation treaty, that company is not subject to corporate tax liabilities in Thailand. The Thai company therefore has no duty to deduct tax at source under section 70 of the revenue code (pursuant to Article 5 and Article 7 of the Double Taxation Treaty between Thailand and Japan).

In respect of VAT (Value Added Tax), the nature of the payment for the services rendered in Japan does not fall under the category of services provided outside Thailand for use in Thailand, therefore, the Thai company does not have to submit VAT on behalf of the Japanese service provider pursuant to section 83/6 (2) of the revenue code.