Thai Corporate Income Tax For Foreign Companies

[valerian]

Hi all,

I have a legal issue I'd appreciate som help with.

According to http://www.rd.go.th/publish/6044.0.html foreign companies have to pay tax on income from Thailand.

The wording is "Foreign company not carrying on business in Thailand receiving other types of income apart from dividend from Thailand"

And the tax rate is 15% of gross reciepts!

Here's my question.

A Thai company engaged in a project in Europe has hired staff from a European company to deliver work to its customer. The customer is also a European company.

The Thai company paid its invoice for staff hire outside of Thailand.

No money acctually entered or left Thailand.

No Service or acctual work for which the payment was made took place in Thailand.

Is my company, the staff provider, liable to pay tax to the Thai Revenue Department for the invoiced amount?

Is the Thai company?

Or is this tax only applicable to income for services rendered in Thailand and/or monies recieved(transferred) out of Thailand?

[TravelerEastWest]

Valerian,

"No money acctually entered or left Thailand."

Interesting that no money left Thailand possibly this may trigger a tax obligation....

You need the advice of a good tax accountant not forum members for this type of question.

Note you need a tax specialist not a small office CPA, preferrably with international transaction experience.

[someoneelse]

The 15% rate you reference is probably the withholding tax rate for passive income such as royalties or interest paid by a Thai resident company to a foreign company, and would generally be impacted by the terms of a double tax agreement (DTA), if one is in place.

Payments for services rendered are not usually subject to withholding tax. These profits are usually covered by a "business profits" article in a DTA, and assuming you are covered by one your company should not be subject to tax in Thailand unless it has a "permanent establishment" (very broadly, a fixed place of business) in Thailand.

As stated above, get your own professional advice. I'm an Australian international tax specialist and while the terms of most DTAs are similar, the actual situation could be very different.