Withholding Tax On Foreign Invoices

[BKKBrit]

Hi

I am trying to find out how small businesses cope with the Withholding tax on foreign invoices. Here's the example. A company in Austria (which had a Double Taxation Agreement with Thailand)invoices me $10,000. Under the Withholding rules of Thailand, I should retain 15% of this and remit to Austria $8,500.

There seems to be something wrong here.

I called the Revenue Dept....no answer. My accountant doesn't really understand this and prefers to say 'yes' to make life easier.

Any advice from anyone who has experience in these issues please?

Many thanks!

Stephen

[richardt1808]

Hi,

There is nothing wrong; the WHT has been in effect for years.

My company had it applied to the tune of 14% when we were consulting here a while back. The idea is to encourage Thai companies to use local suppliers I guess - cant you find a local company to provide the same service ?

At the end of the day, the Australian company should have protected its bottom line by stating clearly in the contract or invoice that the invoiced amount is exclusive of all taxes and other deductions.

Cheers

[TravelerEastWest]

"Hi

I am trying to find out how small businesses cope with the Withholding tax on foreign invoices. Here's the example. A company in Austria (which had a Double Taxation Agreement with Thailand)invoices me $10,000. Under the Withholding rules of Thailand, I should retain 15% of this and remit to Austria $8,500.

There seems to be something wrong here."

A very interesting question.

Are you saying that a service was performed in Thailand for you by the Austrian company?

In that case you may have to withold - I am not sure how much but 3% sounds like a number that I have heard recently at my CPAs office.

If the service was performed outside of Thailand maybe you do not need to withhold the tax.

If a product was sent to you from Austria probably you do not need to withhold.

If possible please provide more details and exactly what did your CPA say? Is your accountant a CPA? If not I would not count on his opinion very much as accounting is not especially advanced in Thailand. For those who wonder what I mean a good example is that CPA auditors are allowed to perform bookkeeping and financial statement preperation and audit the work that they themselves did.

I am very interested in your situation.

[BKKBrit]

"Hi

I am trying to find out how small businesses cope with the Withholding tax on foreign invoices. Here's the example. A company in Austria (which had a Double Taxation Agreement with Thailand)invoices me $10,000. Under the Withholding rules of Thailand, I should retain 15% of this and remit to Austria $8,500.

There seems to be something wrong here."

A very interesting question.

Are you saying that a service was performed in Thailand for you by the Austrian company?

In that case you may have to withold - I am not sure how much but 3% sounds like a number that I have heard recently at my CPAs office.

If the service was performed outside of Thailand maybe you do not need to withhold the tax.

If a product was sent to you from Austria probably you do not need to withhold.

If possible please provide more details and exactly what did your CPA say? Is your accountant a CPA? If not I would not count on his opinion very much as accounting is not especially advanced in Thailand. For those who wonder what I mean a good example is that CPA auditors are allowed to perform bookkeeping and financial statement preperation and audit the work that they themselves did.

I am very interested in your situation.

In essence, it's a rental. I wish I could find this product in Thailand, but there's only one company in the world that has it. It will come here for 3 months and then be re-exported after use. I procure a lot of services in the US, but never have to with-hold given the DTA - Double Tax Treaty in place. However, it appears that even though there's a DTA with Austria, services are excluded. I tried calling the Revenue Dept Help Line...no answer. I filled in their on-line Help Section, only to find after clicking submit, that the system encountered an 'error'.

My accountant - not CPA - feels that I should just have to grin and bear it and pay the with-holding tax. She's magnificent locally but when it comes to foreign services, she's out of her depth.

The invoice from Austria has not yet been sent as the product has not come here yet. Next month it comes. I am just trying to find out whether or not to with-hold 15% even if there's a DTA in place - and if anyone had encountered this before.

Thanks for your time. I appreciate it!

[TravelerEastWest]

"Hi

I am trying to find out how small businesses cope with the Withholding tax on foreign invoices. Here's the example. A company in Austria (which had a Double Taxation Agreement with Thailand)invoices me $10,000. Under the Withholding rules of Thailand, I should retain 15% of this and remit to Austria $8,500.

There seems to be something wrong here."

A very interesting question.

Are you saying that a service was performed in Thailand for you by the Austrian company?

In that case you may have to withold - I am not sure how much but 3% sounds like a number that I have heard recently at my CPAs office.

If the service was performed outside of Thailand maybe you do not need to withhold the tax.

If a product was sent to you from Austria probably you do not need to withhold.

If possible please provide more details and exactly what did your CPA say? Is your accountant a CPA? If not I would not count on his opinion very much as accounting is not especially advanced in Thailand. For those who wonder what I mean a good example is that CPA auditors are allowed to perform bookkeeping and financial statement preperation and audit the work that they themselves did.

I am very interested in your situation.

In essence, it's a rental. I wish I could find this product in Thailand, but there's only one company in the world that has it. It will come here for 3 months and then be re-exported after use. I procure a lot of services in the US, but never have to with-hold given the DTA - Double Tax Treaty in place. However, it appears that even though there's a DTA with Austria, services are excluded. I tried calling the Revenue Dept Help Line...no answer. I filled in their on-line Help Section, only to find after clicking submit, that the system encountered an 'error'.

My accountant - not CPA - feels that I should just have to grin and bear it and pay the with-holding tax. She's magnificent locally but when it comes to foreign services, she's out of her depth.

The invoice from Austria has not yet been sent as the product has not come here yet. Next month it comes. I am just trying to find out whether or not to with-hold 15% even if there's a DTA in place - and if anyone had encountered this before.

Thanks for your time. I appreciate it!

First, I would not for a second trust a non CPA in this type of situation. I would also not trust the revenue department they are not on your side. Why would you withhold 15% if you do not have expert advice telling you do so?

Unless you are a tax accountant and speak Thai you need advice from someone who is qualified otherwise you are just guessing.

It sounds a lot like you are going to pay VAT and duty on receiving the item unless the item is duty and VAT free - is it? Or do you have a special bond/duty free zone situation?

Raro who often posts on this forum may have seen this type of situation before you should ask him.

For a sale why would you withhold anything?

For exporting again within a year you should be able to apply for your duty and VAT paid - if any.

Let us know what happens and best of luck in avoiding taxes.

[BKKBrit]

"Hi

I am trying to find out how small businesses cope with the Withholding tax on foreign invoices. Here's the example. A company in Austria (which had a Double Taxation Agreement with Thailand)invoices me $10,000. Under the Withholding rules of Thailand, I should retain 15% of this and remit to Austria $8,500.

There seems to be something wrong here."

A very interesting question.

Are you saying that a service was performed in Thailand for you by the Austrian company?

In that case you may have to withold - I am not sure how much but 3% sounds like a number that I have heard recently at my CPAs office.

If the service was performed outside of Thailand maybe you do not need to withhold the tax.

If a product was sent to you from Austria probably you do not need to withhold.

If possible please provide more details and exactly what did your CPA say? Is your accountant a CPA? If not I would not count on his opinion very much as accounting is not especially advanced in Thailand. For those who wonder what I mean a good example is that CPA auditors are allowed to perform bookkeeping and financial statement preperation and audit the work that they themselves did.

I am very interested in your situation.

In essence, it's a rental. I wish I could find this product in Thailand, but there's only one company in the world that has it. It will come here for 3 months and then be re-exported after use. I procure a lot of services in the US, but never have to with-hold given the DTA - Double Tax Treaty in place. However, it appears that even though there's a DTA with Austria, services are excluded. I tried calling the Revenue Dept Help Line...no answer. I filled in their on-line Help Section, only to find after clicking submit, that the system encountered an 'error'.

My accountant - not CPA - feels that I should just have to grin and bear it and pay the with-holding tax. She's magnificent locally but when it comes to foreign services, she's out of her depth.

The invoice from Austria has not yet been sent as the product has not come here yet. Next month it comes. I am just trying to find out whether or not to with-hold 15% even if there's a DTA in place - and if anyone had encountered this before.

Thanks for your time. I appreciate it!

First, I would not for a second trust a non CPA in this type of situation. I would also not trust the revenue department they are not on your side. Why would you withhold 15% if you do not have expert advice telling you do so?

Unless you are a tax accountant and speak Thai you need advice from someone who is qualified otherwise you are just guessing.

It sounds a lot like you are going to pay VAT and duty on receiving the item unless the item is duty and VAT free - is it? Or do you have a special bond/duty free zone situation?

Raro who often posts on this forum may have seen this type of situation before you should ask him.

For a sale why would you withhold anything?

For exporting again within a year you should be able to apply for your duty and VAT paid - if any.

Let us know what happens and best of luck in avoiding taxes.

Thank you kindly. I'll let you know what happens at the end of the day. Good point about the duty and VAT paid. I shall add that onto the list of things to check also. Thanks for your advice and time.