The current basis for calculating corporate income tax can be divided into four categories: net profit, the transfer of profit out of Thailand, money paid from or within the country, and gross income before deducting expenses.
In terms of the tax base calculated from money paid from or within the country, the entities liable for tax include companies or partnerships established under foreign laws that do not operate business in Thailand but earn assessable income under Section 40 (2), (3), (4), (5), or (6), paid from or within Thailand.
In this case, the tax payment is made through a withholding tax method, where the payer must deduct tax from the assessable income. Whoever the payer may be, the tax withheld in this case is the final tax, thus it is finalized on a per-instance basis. In a situation where the assessable income is paid to a foreign company or partnership, which is a branch of a company or partnership established under Thai law, the payer does not need to withhold tax under this base, because the recipient of the income is not liable for this type of tax.
Income to be withheld for tax purposes includes the assessable income of foreign companies or partnerships, which the payer is responsible for withholding, under Section 40 (2), (3), (4), (5), or (6):
1. Assessable income under Section 40 (2) refers to income earned from employment or from a position, or from performing a job (loan guarantee fees are, in practice, considered as assessable income of type 8).
2. Assessable income under Section 40 (3) includes the value of goodwill, the value of copyrights or other rights, annuities, or annual income derived from inheritance, other legal transactions, or a court verdict.
3. Assessable income under Section 40 (4) includes:
(A) Interest from bonds, deposit interest, share loan interest, promissory note interest, loan interest, whether there is a guarantee or not.
In the case of receiving interest from the Thai government or special law financial institutions established for lending to promote agriculture, commerce, or industry, there is no need to pay this tax (Section 70, Paragraph 2).
(B) Dividend income, profit share, or other benefits obtained from a company, partnership, or mutual fund.
(C) Bonus paid to shareholders or partners in a company or partnership.
(D) Capital reduction of a company or partnership, only the part that is paid not exceeding the profit and the reserved money combined.
(E) Capital increase of a company or partnership, which sets profit earned or reserved money combined.
(F) Benefits obtained from a company or partnership merging, taking over, or terminating, which is valued as income more than the capital.
G) Benefits obtained from the transfer of partnership, shares, bonds, promissory notes, or debt securities issued by a company, partnership, or other person, only if it is valued as income more than the investment.
4. Income assessable under Section 40 (5), i.e., money or other benefits derived from property leasing.
5. Income assessable under Section 40 (6), i.e., income from a liberal profession such as the law, medical practice, engineering, architecture, accounting, and decorative arts.
The method of calculating tax deductions has principles and methods separated according to the type of income, as follows:
For the submission of the tax payment report, the withholding tax for juristic persons at the place of payment for the aforementioned foreign companies, the payer must withhold tax at the place of payment and submit a list and remit taxes within 7 days from the end of the month of the month in which income was paid. The submitted report is application form Por Ngor Dor 54 (If no income is sent overseas, there is no need to submit this form).
Data updated on November 14, 2020
Source: The Revenue Department, 90 Phaholyothin 7, Phayathai, Phayathai, Bangkok 10400
Tel. +66 2272 8000
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