Most foreign businesspeople are familiar with withholding tax (aka PAYE or Pay as You Earn) as it relates to income tax. A certain percentage is withheld and paid on behalf of an individual, usually from salaries, royalties, etc. In Thailand, income tax withholding for employees does occur, but normally, “withholding tax” as a term refers to taxes related to third party vendors and suppliers.
What is withholding tax in Thailand?
If you operate a business in Thailand, Thailand’s Revenue Code requires you to pay tax on certain goods and services that you acquire for your business. This includes:
Service – WHT Rate
Rent – 5%
Parking – 3%
Telephone – 3%
Advertising – 2%
Professional Fees – 3%
Royalties – 3%
It is your responsibility to withhold this from the invoiced amount, before VAT, and remit that withholding tax (WHT) to the Revenue Department.
The invoice lists VAT, where’s the withholding tax?
By law, you must remit WHT with Form PND 53 by the 7th of the following month (currently an additional 8 days is given if filing online). Regardless of whether you withhold this amount from your payment, you will still be liable for paying WHT. However, unlike VAT an invoice does not have to show the amount of tax to be withheld so care must be given when calculating how much should be deducted from an invoice before paying it.
For example, you received an invoice due 15 October for 10,700 THB for legal services – 10,000 THB plus 700 THB VAT. Rather than paying 10,700 THB, you would pay 10,400 THB and send a WHT tax certificate for 300 THB to the law firm. Then, you would remit 300 THB with Form PND 53 to the Revenue Department before 7 November (or 15th November if submitting online).
If PND 53 is for withholding tax, what about PND 1 or PND 3?
While PND 53 is for withholding tax related to vendors and suppliers, PND 1 is for withholding income tax for employees. PND 3 is similar to PND53 as it is for third party vendors and suppliers, but those who are individuals, not juristic entities. (In case you’re wondering, PND 2 is for remitting withholding tax on corporate dividends and interest.)
Can GPS Accounting help me with these Thai withholding tax requirements?
GPS Accounting can absolutely help you with withholding tax requirements. We can work with your finance team or arrange to handle the payments and filings on your behalf. Our team of English-speaking Thai tax experts are very experienced at explaining to and assisting foreign businesses operating in Thailand in understanding the differences between PND 1, PND 2, PND 53, and all the other requirements to ensure smooth operations in Bangkok, Thailand. If you need help with your withholding tax compliance or any other tax, accounting, or auditing issues, contact GPS Accounting today for your free initial consultation. Our office is conveniently located on Sukhumvit Soi 23, you can find our location here.