Understanding Withholding Tax in Thailand
Withholding Tax (WHT) is a tax deducted at source from certain payments made in Thailand, such as services, rent, royalties, dividends and interest.
Instead of the recipient paying the full amount of tax later, part of the tax is withheld by the payer and remitted directly to the Thai Revenue Department.
For the recipient, withholding tax generally acts as a prepayment of Corporate Income Tax or Personal Income Tax.
As a foreign entrepreneur, understanding WHT obligations is essential to remain compliant and avoid administrative issues.
How does Withholding Tax work?
The process generally follows these steps:
- A company receives an invoice from a supplier or service provider
- The customer deducts the applicable WHT amount
- The remaining amount is paid to the supplier
- The deducted amount is submitted to the Thai Revenue Department
- A withholding tax certificate is issued to the supplier
The withholding tax certificate serves as proof of the deduction and may be used by the supplier for tax purposes.
Common Withholding Tax rates in Thailand
The applicable rate depends on the nature of the payment.
Examples of commonly used rates:
Services (Paid in / out of Thailand) 3% / 15%
Non-life insurance 1%
Software 3%
Royalties (Paid in / out of Thailand) 3% / 15%
Office or Equipment rental 5%
Advertising 2%
Dividends 10%
Prizes 5%
Interests 1%
Specific situations, international agreements or tax treaties may affect the applicable rate.
Businesses subject to Withholding Tax obligations are required to submit withholding tax returns to the Thai Revenue Department.
Different forms are used depending on the type of payment and the recipient.
PND1 – Salary and employment income
PND1 is used for withholding tax related to salary payments and employment income.
Typical situations include:
- Salaries paid to employees
- Employee compensation and benefits
- Employment-related income subject to withholding tax
PND3 – Payments to individuals
PND3 is generally used for withholding tax deducted from payments made to individuals who are not employees.
Typical situations may include:
– Professional services provided by individuals
– Freelancers or consultants
– Certain service fees paid to individuals
PND53 – Payments to companies and legal entities
PND53 is generally used for withholding tax deducted from payments made to companies and legal entities.
Typical situations may include:
– Service fees
– Office or equipment rental
– Advertising services
– Software fees
– Other payments subject to withholding tax
Filing deadlines
As a general rule, PND1, PND3 and PND53 returns must be submitted before the 15th of the following month through the e-Filing system.
Businesses are required to submit the relevant forms and pay the applicable withholding tax within the required deadlines. Failure to comply with filing obligations may result in penalties and surcharges.
Foreign-owned businesses and entrepreneurs operating in Thailand often face challenges such as:
- Determining when WHT applies
- Understanding applicable rates
- Managing withholding tax certificates
- Ensuring accurate reporting
Incorrect withholding tax treatment can lead to reporting issues, penalties and unnecessary administrative complications. Our team helps businesses manage their WHT obligations accurately and efficiently
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What is withholding tax in Thailand?
Withholding tax is a tax deducted directly from certain payments before the remaining amount is paid to the recipient.
Who pays withholding tax in Thailand?
The customer deducts the applicable tax when paying the invoice and remits it to the Revenue Department, while the recipient receives a withholding tax certificate that is later used later for tax reporting purposes.
Why did tax get deducted from my invoice?
Many foreign entrepreneurs in Thailand are surprised when they receive payment lower than the invoice amount.
This often happens because the customer deducted withholding tax before making payment. The supplier should receive a withholding tax certificate for the deducted amount.
Can companies recover withholding tax?
Withholding tax acts as a tax credit or prepayment and may be offset against future tax liabilities, depending on the applicable rules and tax status of the company.
Businesses should retain their Withholding Tax Certificates carefully, as these documents are essential for tax reporting purposes.
What happens if withholding tax obligations are not respected?
Late filing or non-compliance may result in penalties, surcharges and administrative complications.
