Thailand Makes Several Changes to Withholding Tax in 2025, Including Mandatory E-Filing

What You Need to Know About Withholding Tax in Thailand

In Thailand, the payer is required to withhold tax from payments made to the receiver at the time of payment for certain payment types. The withholding tax (WHT) is charged on the various types of income including salaries, service fees, professional income, dividends, interest, rental income, and prize winnings. The WHT must be remitted to the Thai Revenue Department by the 7th day of the month following the payment. For example, tax deducted in June must be filed by 7 July. 

The aim of such WHT at source is to lower tax evasion, reduce annual burden on taxpayers, and improve the efficiency of tax collection for the government. Both Thai and foreign recipients are subject to WHT regulations. Failure to comply may result in a monthly interest penalty of 1.5% and other fines.

Legal Framework and Responsibilities Regarding WHT

The Revenue Code governs WHT in Thailand. It specifies the types of income that are subject to WHT, the applicable rate, and the documentation requirements. The tax rate depends on the recipient's residency, the type of income, and other variables usually ranging from 0% to 35%.  The payer must issue a withholding tax certificate to the payee as proof that tax has been deducted.

These regulations are applicable to both private citizens and legal entities like partnerships and corporations. If foreign companies earn income from Thailand, they are required to pay tax even if they do not operate their business in the country. If there are Double Tax Agreements (DTAs) between the foreign countries, the WHT rate may be reduced or waived.

Key Regulatory Updates

1. Mandatory Electronic Submission (Effective from January 1, 2025)

All WHT returns must be made electronically using the Revenue Department's E-Filing system starting on January 1, 2025. Paper submissions are no longer accepted, except for situations in which electronic filing is not feasible.

The taxpayer is required to provide a written explanation to the local Area Revenue Branch Office in such circumstances. This change is part of Thailand's shift to digital systems, which aims to reduce paperwork and simplify tax compliance.

2. Revised WHT Forms

The Revenue Department has updated withholding tax reporting forms to align with current regulations:

• Por.Ngor.Dor.1: For income under Sections 40(1) and (2) (e.g., salaries and wages)

• Por.Ngor.Dor.2: For income under Sections 40(3) and (4) (e.g., commissions and service fees)

• Por.Ngor.Dor.3: For income under Sections 40(5) to (8) (e.g., royalties and other fees)

• Por.Ngor.Dor.53: For payments from government agencies or companies to juristic persons exceeding 500 baht

All forms must be submitted online through the E-Filing system.

Reduced WHT Rates for E-Withholding System (2023–2025)

Certain payments made using the electronic withholding tax system are eligible for reduced WHT rates under Ministerial Regulation No. 389/2566. The eligible payments are subject to a 1% rate from January 1, 2023, to December 31, 2025 instead of the standard 3% to 5% rates.

The income eligible for this reduced rate is hire of work or services, royalties, rental of property (excluding international shipping), professional services, and prize payments. However, normal WHT rates will be applied if the electronic system is not utilised.

Withholding Tax for Foreign Recipients

Foreign individuals and companies that receive income from Thailand are subject to regular WHT rates unless otherwise specified by an applicable DTA. For professional fees, interest, royalties, rental revenue, and technical services, the conventional rates are usually 15%. Transportation services are subject to a 3% tax, while dividends are subject to a 10% tax. In order to check if a reduced rate or exemption is applicable, taxpayers must verify whether a DTA is in place between Thailand and the nation of the foreign recipient.

Thailand has signed DTAs with many countries to prevent money from being taxed twice. These agreements may offer lower WHT rates or exemptions for specific income categories.  In order to receive the benefits of a DTA, the taxpayer needs to accurately apply the relevant treaty provision and provide the correct documents. By carefully reading the conditions of the appropriate DTA, businesses and individuals would be able to apply the proper tax treatment and avoid unnecessary tax burdens.

Practical Steps for WHT Compliance

Businesses must make sure they utilise the appropriate forms depending on the type of payment in order to comply with the revised WHT standards. The Revenue Department's E-Filing technology is required for all WHT filings. Recipients must get withholding tax certificates, and accurate records must be kept. Companies should analyse any DTAs and request any applicable relief before making payments to foreign companies.

Keeping up with Thailand's ever-changing tax laws can be challenging.  At BizWings, we provide an integrated service including keeping up with your WHT duties monthly so you can stay compliant and up-to-date with the latest laws. Reach out to us to find out more about how we can help at contact@bizwings.co.

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