Avoid Charging Withholding Tax Of 15% On Services For Clients Abroad

[tingtongmaak]

How do I avoid charging or paying 15% withholding tax for services our company provide for overseas clients?

For example.

My accountant has told me that I need to pay 15% withholding tax for my web design services.

Can I just sell them the website as a product and therefore I am not providing a service?

This could be a problem as almost all work we do we bill 50% upfront and 50% on completion.

What a dum system!

[Irene]

If I understand your question correctly, you are a recipient of income for services rendered to overseas clients, receiving of that income is not subject to Thai withholding tax at 15%. It is applicable the other way round when you have to pay fees from Thailand to an overseas recipient, then that Thai withholding tax could apply.

[tingtongmaak]

Thanks for your reply. Yes you understand the question correctly

So as a Thai company I do not have to charge 15% tax to my overseas clients for buying the companies services overseas.

But as a Thai company I must pay 15% withholding tax if I buy something overseas.

This would make sense!

I don't know what I pay this accountant for...

[AFKAFSinLOS]

BTW On the subject of taxes and websites, check what you are doing for VAT.

Normally exports are zero-rated. However, for websites the Thai Revenue decided that even if you do them for a foreign client outside Thailand they could also be viewed by Thai people in Thailand, hence should be subject to VAT.

This is a hassle on several levels, including explaining to your customer why there is VAT on an export, the extra cost to some of your customers, explaining to them why Thailand issues a proforma invoice and a tax invoice later etc etc. Also makes Thailand and people doing business there look backward when you are discussing such things...not good for your business and image...

Luckily they changed the rules so that you could use the actual exchange rate rather than BOT official rate, which used to give rise to exchange rate differences on VAT on exports (crazy but true!).

BTW This was a few years back, so it might have changed since, but worth checking as you don't want the VAT inspectors coming along for an audit and a donation...