Reduction in withholding tax rates and e-withholding tax
Ministerial Regulation No. 361, which was published in the Government Gazette on 30 March 2020, reduced withholding tax rates on certain types of payments temporarily from 3% to 1.5%. This was one of the measures taken to support businesses during the COVID-19 outbreak. From 1 October 2020, the normal withholding tax rate of 3% shall apply, unless withholding tax is remitted electronically (“e-withholding tax”).
Keywords: Mazars, Thailand, Tax, COVID-19, Government Gazette, Withholding tax, e-Withholding Tax, VAT, Revenue Department
2 September 2020
If withholding tax is remitted electronically for certain types of payments made from 1 October 2020 through 31 December 2021, the rate shall be reduced from 3% to 2%.
Under Ministerial Regulation No. 364 and Notification of the Director-General of the Revenue Department (No. 20), the bank acts as an agent to deduct and remit withholding tax to the Revenue Department on behalf of a company or legal partnership. A company or legal partnership which wants to remit withholding tax electronically must provide at least the following information:
1. The tax identification number of the company or legal partnership which is required to remit the withholding tax to the Revenue Department (“the payer”);
2. The name or tax identification number of the recipient;
3. The type and amount of assessable income which is paid, including the amount of VAT (if any); and
4. The amount of withholding tax to be deducted and remitted to the Revenue Department.
When the bank receives the withholding tax from the payer, the bank shall issue confirmation of receipt of the withholding tax to both the payer and the recipient electronically. This confirmation must contain at least the following information:
1. The tax identification number of the payer;
2. The tax identification number of the recipient;
3. The type of assessable income which is paid;
4. The amount of withholding tax;
5. The amount of VAT (if any); and
6. A reference number assigned by the bank.
The payer shall provide its contact details and those of the recipient to the bank in order for the bank to send the confirmation. The bank may send the confirmation to the payer and the recipient by SMS. The SMS must contain at
least the information listed in points 1, 2, and 4 above. The confirmation issued by the bank to the payer and the recipient shall be considered evidence that the withholding tax was deducted, and thus issuing a withholding tax certificate shall not be required.
The bank shall remit the withholding tax and the information obtained from the payer to the Revenue Department by the deadline agreed on with the Revenue Department, but no later than 4 working days from the date that the bank received the withholding tax and information from the payer. When the Revenue Department receives the withholding tax from the bank, the Revenue Department shall issue a receipt to the payer electronically, and the transaction shall be considered completed.
The payer and the recipient can log into the Revenue Department’s online tax filing system to check withholding tax payments.
The reduced withholding tax rate of 2% shall apply to payments made by a company or legal partnership for the following:
Type of payment | Recipient |
Assessable income under Section 40 (2) of the Revenue Code, which is income from rendering services, such as brokerage fees or commissions
| A company or legal partnership conducting business in Thailand, excluding: - foundations or associations conducting a revenue-producing activity; and - foundations or associations designated by the Minister under Section 47 (7) (b) of the Revenue Code. |
Assessable income under Section 40 (3) of the Revenue Code, which is goodwill, copyrights, or other rights | |
Assessable income under Section 40 (6) of the Revenue Code, which is income from liberal arts professions, such as law, engineering, or architecture | A person liable to personal income tax or corporate income tax only if that person is domiciled in or a resident of Thailand or conducting business in Thailand, excluding: - foundations or associations conducting a revenue-producing activity; and - foundations or associations designated by the Minister under Section 47 (7) (b) of the Revenue Code.
|
Assessable income under Section 40 (7) of the Revenue Code, which is income from a contract of work whereby the contractor provides essential materials besides tools | |
Assessable income under Section 40 (8) of the Revenue Code, which is remuneration for hire of work, prizes, discounts, or other benefits due to sales promotions and other services, excluding the following: - remuneration for public entertainers - advertisement - premiums for non-life insurance - transport charges |
As of August 2020, a handful of banks were offering the e-withholding tax service. We recommend contacting your bank to understand more about their process and the associated service fees.
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