Withholding tax, VAT, etc on invoices to overseas customers ?

[JohnnyBKK]

Hello,

 

I want to sell a service to a company in Dubai from my Thai company, what kind of tax should I add on the invoice ? Is there any withholding tax for sold services to overseas customers ?

 

Example, I want to rent out a computer located in Bangkok to a Dubai company, should I charge for the service only ? Also for VAT as the computer is located in Bangkok ? What about withholding tax ?

 

I called an accountant to ask but he wasn't very helpful.

 

Thanks.

[Gulfsailor]

5% withholding tax on equipment rental. Withholding tax is not noted on the invoice. Either the customer deducts it and pays to Thai RD and then gives you proof of this, or more likely if customer is abroad he pays full amount, and you pay the withholding tax yourself. Plus you need to charge 7% VAT on the invoice (providing you are VAT registered), because the service is done in Thailand. Any capable accountant should be able to tell you this and make the necessary PP30 and PND statements for you. 

[blackcab]

It is the company paying the invoice that deducts WHT. As that company is abroad, they are not going to do it, because they have no way of paying the WHT to the Thai revenue department.

 

So no WHT, but yes include VAT.

 

Personally I think you are making it way to complicated. Why not just make one invoice per month for "Cash Sales"? Add on VAT and send the invoice to the accountant.

[JohnnyBKK]

Hi,

 

Thanks for the answers, the 2 answers are a bit different.

 

So should we invoice the full amount and pay WHT ourselves or should we just skip this tax and charge only VAT as blackcab said ?

 

If we make an invoice for cash sales, we still need to put some company name in there, if we put Dubai, then it's a foreign company.

[JohnnyBKK]

On this page it doesn't say if received it only says if paid to ... http://www.rd.go.th/publish/6044.0.html

 

It seems like there is no WHT if a foreign company buys a service from a thai company.

Edited October 13, 2017 by JohnnyBKK

[JohnnyBKK]

I found some information, it seems like the WHT is 15% unless it's a country in the double tax agreement.

 

http://sherrings.com/international-withholding-tax-rates-thailand.html

 

Dubai it's in the UAE, the WHT is 0.

 

Please correct me if I'm incorrect.

 

Thanks

[Gulfsailor]

5 hours ago, JohnnyBKK said:

I found some information, it seems like the WHT is 15% unless it's a country in the double tax agreement.

 

http://sherrings.com/international-withholding-tax-rates-thailand.html

 

Dubai it's in the UAE, the WHT is 0.

 

Please correct me if I'm incorrect.

 

Thanks

I was also reading that site earlier. But you misinterpreted the info. The WHT expemption (see note1) is if you as a Thai entity would pay the Dubai company for services rendered. A tax treaty is to prevent double taxation, so it's not taxed in both countries. 

Actually according to international tax regulations the computer rental is most likely considered to fall under equipment royalty. The link you shared says this has a 15% WHT rate. 

You do know that withholding tax can be used as a credit against corporate tax due. So if the company makes a profit that WHT is not costing you anything. 

Just get a real accountant and they will figure it out for you. 

 

[blackcab]

You need to understand the principle of WHT. WHT is deducted by the company paying the money, not the company receiving the money - if the company is in Thailand.

 

On 14/10/2017 at 3:19 AM, JohnnyBKK said:

If we make an invoice for cash sales, we still need to put some company name in there...

 

No you don't. You don't have to put any purchaser details in there at all. Think about real life:

 

You are selling items in front of your shop. I walk past, buy something and pay cash. That's it. End of transaction.

 

Do you think 7-Eleven records the details of every customer who buys things? Do restaurants? What about petrol stations or massage shops?

 

Most end user sales are cash sales. There is no need to record their details because that purchaser does not need a VAT receipt (because they will not be claiming back VAT).

[Gulfsailor]

I assume the customer in Dubai is not sending Thai Baht notes by mail. In stead any payment would be wire transferred to the Thai company's account. How could one possibly file that as a cash sale? Plus I also assume the the Dubai company would want an invoice which accurately describes the services rendered.

[blackcab]

6 hours ago, Gulfsailor said:

I assume the customer in Dubai is not sending Thai Baht notes by mail. In stead any payment would be wire transferred to the Thai company's account. How could one possibly file that as a cash sale? Plus I also assume the the Dubai company would want an invoice which accurately describes the services rendered.

 

The point I was making is that it might be easier to sell the item for cash in Thailand as opposed to an international customer.

 

Obviously this highly depends on the OPs circumstances.

[JohnnyBKK]

On 15/10/2017 at 1:04 AM, Gulfsailor said:

I was also reading that site earlier. But you misinterpreted the info. The WHT expemption (see note1) is if you as a Thai entity would pay the Dubai company for services rendered. A tax treaty is to prevent double taxation, so it's not taxed in both countries. 

Actually according to international tax regulations the computer rental is most likely considered to fall under equipment royalty. The link you shared says this has a 15% WHT rate. 

You do know that withholding tax can be used as a credit against corporate tax due. So if the company makes a profit that WHT is not costing you anything. 

Just get a real accountant and they will figure it out for you. 

 

Royalty is very different than renting a server (service).

[Gulfsailor]

5 hours ago, JohnnyBKK said:

Royalty is very different than renting a server (service).

Actually it's not. But whether cross border server lease is seen as equipment royalty depends on what is stated in the tax treaty between Thailand and UAE. If nothing specified than I advise to ask the Thai RD directly. 

Google shows several countries having recent court cases regarding this exact matter. In all cases I could quickly find was it ruled that it is considered a royalty. 

[JohnnyBKK]

Offering a service like "maintenance of the server and usage of its processing power" can't be seen as a royalty in any country.

It's a service as you need a technician to take care of that processing unit for the customer.

[daviddabit]

Please be careful reading and interpreting revenue code. 

 

Withholding tax are meant for payment made to a foreigner who is not a tax resident and providing their services to local (Thailand) entity in Thailand jurisdiction.  The purpose WHT is to make sure foreigner that earns any income from a local company are paying tax in local (Thailand)jurisdiction before they leave the country.  For your case, WHT is not applicable since you are the service provider to a foreign entity / individual. 

 

If the computer is rented to a foreign entity but it was consumed in Thailand jurisdiction, it is a local supply of services and therefore it is subject to 7% VAT.  For example, Rent THB10,000 + VAT 7% = total on invoice THB10,700.

 

If the computer is rented to a foreigner entity and consumed in foreign jurisdiction (Dubai in this case), you will not need to bill the client 7% VAT.  In this situation, WHT will comes into picture as you are not a tax resident in Dubai and providing services in Dubai.  This is when you will determine the Double Taxation Agreement between Dubai and Thailand on the WHT rate for rental of movable equipment.  However, there are no WHT in UAE jurisdiction and therefore you are not subject to WHT when you receive the payment from the Dubai entity. 

[Epstein]

WHT is only due while paying FROM a Thai company TO a Foreign company.

VAT is only applied on services/goods used INSIDE Thailand.

 

This means for your case:

Invoicing with 0% VAT and no WHT at all. The amount is added to profit of your Thai company, ie will be taxed at the financial year if there are no losses.