On 27 March 2020, the Ministry of Finance enacted Ministerial Regulation No. 361 (the “Ministerial Regulation”) that is issued under the Thai Revenue Code and provides for withholding tax relief in addition to previous COVID-19 Relief Measures.
As far as relief measures for affected businesses are concerned, the Ministerial Regulation provides that the withholding tax imposed on payments by a company or juristic partnership (excluding charitable foundations and associations) on certain taxable income from 1 April 2020 to 30 September 2020 will be reduced from 3% to 1.5%, with an additional subsequent reduction from 3% to 2% for the period from 1 October 2020 to 31 December 2021. The relief on withholding tax is provided that the payments be made via the Thai Revenue Department’s “e-Withholding” tax system.
Please see below a summary of the income per Section 40 of the Revenue Code that the relief will apply:
- Section 40 (2): withholding tax imposed on payments to a company or juristic partnership for the performance of work, meeting allowance, gratuity, house rental allowance, etc.
- Section 40 (3): withholding tax imposed on payments to a company or juristic partnership for income derived from goodwill, copyright and any other rights that are similar in nature to royalties.
- Section 40 (6): withholding tax imposed on payments to a company, juristic partnership, or individual for income derived from liberal professions i.e., laws, medical services, engineering, architecture, accounting and fine arts.
- Section 40 (7): withholding tax imposed on payments to a company, juristic partnership, or individual for income derived from a contract of work where the contractor has to provide essential materials besides tools e.g. turn-key contract.
- Section 40 (8): withholding tax imposed on payments to a company, juristic partnership, or individual for Income derived from the hire of work, prizes, discount or any benefits in connection with a sale promotion, and certain other services, excluding service fees paid to hotels, restaurants and life insurance premium.
Please let us know if you have any questions or queries with the above.
While this document is updated on a regular basis, it has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice.
Head of Regional Tax Practice
Thailand Tax Director
Head of Regional Compliance & Investigations Practice