Withholding Tax?

[SamiJan]

My husband has sent an invoice from his South African company to a Thai company for services he rendered. 

 

Legally, VAT cannot be charged to customers outside of South Africa, but the company in Thailand wants him to add a 7% holding tax to the invoice. 

 

Can someone explain this to me? Where on the internet can I see this 7% holding tax that is being held or charged or whatever on a service purchased outside of Thailand? It doesn’t make sense to me at all. 

[Crossy]

Withholding Tax is a fact of life for those providing international services.

 

http://www.mazars.co.th/Home/Doing-Business-in-Thailand/Tax/Withholding-Tax-in-Thailand

 

Next time specify that the rate be "nett of tax" so what you specify is what you get paid. It seems the client is asking you to invoice 7% more so you get paid what you expect. Nike! (just do it).

 

If you really want a hard (taxing) time do work for India!

[SamiJan]

12 hours ago, Crossy said:

Withholding Tax is a fact of life for those providing international services.

 

http://www.mazars.co.th/Home/Doing-Business-in-Thailand/Tax/Withholding-Tax-in-Thailand

 

Next time specify that the rate be "nett of tax" so what you specify is what you get paid. It seems the client is asking you to invoice 7% more so you get paid what you expect. Nike! (just do it).

 

If you really want a hard (taxing) time do work for India!

I appreciate your help. Thank you. Based on this article the whithilding tax should be 3% - not 7%. So I’ll certainly send this to them. 

 

Many thanks!

[DGS1244]

VAT is 7% with holding tax is 3%. If you are receiving monies from abroad then it does not apply and if you are paying an account from Thailand to abroad it also does not apply.

[Crossy]

14 minutes ago, DGS1244 said:

VAT is 7% with holding tax is 3%. If you are receiving monies from abroad then it does not apply and if you are paying an account from Thailand to abroad it also does not apply.

 

Are you quite sure WHT does not apply (VAT shouldn't)?

 

From the page I linked to earlier "Remittances made to overseas suppliers may also incur a WHT deduction."

 

Our OP is an overseas supplier of a service.

 

[DGS1244]

1 hour ago, Crossy said:

 

Are you quite sure WHT does not apply (VAT shouldn't)?

 

From the page I linked to earlier "Remittances made to overseas suppliers may also incur a WHT deduction."

 

Our OP is an overseas supplier of a service.

 

Normally WHT does not apply but there are always complications with some things Thai. Will depend upon how the contract is set up and where. As they say been there, done that but.......

A couple of times I have been asked for a copy of my 'Tax' card which fortunately I have.

[SamiJan]

5 hours ago, DGS1244 said:

VAT is 7% with holding tax is 3%. If you are receiving monies from abroad then it does not apply and if you are paying an account from Thailand to abroad it also does not apply.

So if a company in Thailand is paying for services that a SA company did, there shouldn’t be a withholding tax?

Edited November 29, 2017 by SamiJan
Spelling

[SamiJan]

5 hours ago, Crossy said:

 

Are you quite sure WHT does not apply (VAT shouldn't)?

 

From the page I linked to earlier "Remittances made to overseas suppliers may also incur a WHT deduction."

 

Our OP is an overseas supplier of a service.

 

I have no idea. The people here are basically like “don’t argue with me - this is how it is”. Lol. So I’m trying to get some “proof” of whether it should be held or not ?

[SamiJan]

4 hours ago, DGS1244 said:

Normally WHT does not apply but there are always complications with some things Thai. Will depend upon how the contract is set up and where. As they say been there, done that but.......

A couple of times I have been asked for a copy of my 'Tax' card which fortunately I have.

There is no contract haha! 

[userabcd]

1 hour ago, SamiJan said:

So if a company in Thailand is paying for services that a SA company did, there shouldn’t be a withholding tax?

Check this link https://www.lorenz-partners.com/download/thailand/NL003E-The-Thai-Withholding-Tax-System-Mar17.pdf and see if it helps, some brief info there. Also refer to the DTA between Thailand and RSA which can be sourced from the Thai tax site and from the SARS site.

[SamiJan]

4 minutes ago, userabcd said:

Check this link https://www.lorenz-partners.com/download/thailand/NL003E-The-Thai-Withholding-Tax-System-Mar17.pdf and see if it helps, some brief info there. Also refer to the DTA between Thailand and RSA which can be sourced from the Thai tax site and from the SARS site.

I appreciate the help. THanks so much!

[userabcd]

And here is another link from PWC with more detailed info: https://www.pwc.com/th/en/publications/assets/thai-tax-2017-18-booklet-en.pdf

Edited November 29, 2017 by userabcd

[glamont002]

If the services were performed outside  of  Thailand, under the tax treaty between SA and Thailand there should be no withholding tax (WHT) and never any VAT ( the Thai company making the payment self assess reverse charge input VAT). The Thai company making the payment is likely unaware of tax treaties and is applying the normal Thai to Thai WHT. Which should be 3%.

[Monomial]

The withholding for a foreign corporation providing a service to a Thai company is generally 15% unless you can prove the service was provided entirely outside Thailand for use entirely outside Thailand. This can sometimes be mitigated by taxation treaty, depending on the country and the specific treaty terms.

 

If the company is charging you 7%, it means they are treating this as an asset purchase and not as provided services. There should be no reason for you to invoice an additional 7% in this case. They would just pay the 7% to the revenue department as if they were importing a product. It sounds like they are doing something dubious.

 

Legally, you should receive 15% less that you invoice, with the balance being sent as withholding to the revenue department.