Why is tax withheld from some payments, and what should you do after it has been deducted? Withholding tax is connected to the income tax settled each year. This guide explains the basic roles and records involved; the applicable rules depend on the type of payment and current Thai tax law.
What is withholding tax?
Withholding tax forms part of the calculation of personal or corporate income tax. The amount withheld can affect whether more tax is payable or a refund is due for the year.
What is withholding tax?
Withholding tax is an amount that a payer deducts from income when paying a recipient, where the law requires withholding.
Withholding tax is paid in advance
The deducted amount is generally treated as tax paid in advance and is considered when calculating annual income tax. The treatment can differ for particular types of income.
How withholding tax relates to income tax
Annual income tax is calculated from income for the year after applicable expenses and allowances. Advance payments—including any applicable half-year tax and withholding tax—are then credited against the calculated tax. The difference may be tax still due or an amount eligible for a refund, subject to the rules that apply.
Who is responsible for withholding tax?
Where the law requires withholding, the payer is responsible for deducting tax when making the relevant payment to a recipient.
The payer
A payer may need to withhold tax from different types of income, such as wages, rent, interest, or dividends. Whether withholding applies and what rate to use depend on the payment and the parties involved.
The recipient
A recipient should obtain a withholding-tax certificate, known in Thailand as Form 50 Bis, from the payer and keep it for the annual tax filing.
Requesting Form 50 Bis
Ask the payer for Form 50 Bis when tax has been withheld. Keep the certificate with the records needed for the annual return.
What should a recipient do after tax is withheld?
Request the Form 50 Bis certificate and collect the supporting records. Use the information when filing the annual return and calculating the credit for tax already paid.
Example of a withholding-tax calculation
Suppose annual tax calculated is 100,000 baht, half-year tax paid is 30,000 baht, and withholding tax already deducted is 20,000 baht. The remaining amount in this example is 50,000 baht: 100,000 − 30,000 − 20,000. Actual tax depends on the person’s circumstances and applicable rules.
Withholding tax as Final Tax
In some cases, a taxpayer may choose a withholding-tax treatment as a final tax for that income, rather than include it in the annual calculation. Eligibility and consequences depend on the type of income and current law.
What is Final Tax?
Final Tax describes a treatment in which tax withheld on certain income is not included in the recipient’s annual income-tax calculation. Whether this option applies should be checked for the particular income.
Interest and dividends as Final Tax
The article gives interest and dividends as examples of income for which a final-tax option may be available. Check the current rules and compare the consequences before making a choice.
Important document: Form 50 Bis
Form 50 Bis is the certificate of withholding tax issued by a payer. Recipients should keep it as evidence for tax filing.
What is Form 50 Bis?
It is a certificate from the payer showing that withholding tax was deducted from a payment.
Request Form 50 Bis
When withholding tax applies, ask the payer for the certificate and check that it records the relevant payment and tax amount.
How to use Form 50 Bis
Use the certificate when filing the annual return so the amount already withheld can be considered as a tax credit where permitted.
Common withholding-tax problems
Withholding tax can create practical questions for both the payer and the recipient.
Issues for recipients
A recipient may have difficulty obtaining Form 50 Bis or understanding how to report it on an annual return. Keep records and ask the payer to correct missing or inaccurate certificate details.
Issues for payers
A payer may need to determine the correct treatment, calculate the amount, and remit it under the applicable requirements. Errors can create follow-up work for both parties.
What payers need to know
Payers need to understand the relevant withholding rules so that they can meet their obligations for each payment.
Individual payer versus company
The payer may be an individual or a legal entity. Their responsibilities can differ depending on the type of payment and the law that applies.
Types of income
Identify the income category before deciding whether tax must be withheld. Examples mentioned here include wages, rent, interest, and dividends; different categories can have different rules.
Individual recipient versus company
Whether the recipient is an individual or a legal entity can affect the applicable withholding treatment and rate. Confirm the recipient’s status and the rules for the specific payment.
Possible exception for payments below 1,000 baht
The source article mentions that some payments below 1,000 baht may be exempt in particular cases. This is not a universal threshold. Check the payment type, circumstances, and current Revenue Department rules before applying an exception.
Example: withholding tax on rent
The following example illustrates the questions a payer may need to consider for a rental payment.
Company A pays rent
Company A pays rent for a building to an individual. The payer should determine the applicable treatment for that payment rather than assume one rate applies to all rental arrangements.
Find the rate in the relevant guide
Consult current withholding-tax guidance to identify the rate and reporting requirements that apply. A guide is a starting point; confirm that it covers the parties and payment in the example.
Company A and Mr. Bugnoms
In the example, Company A withholds tax from rent paid to the individual and remits it as required. The actual calculation and filing depend on current rules and the details of the transaction.
Withholding-tax guide
A withholding-tax guide can help a payer identify how to calculate and deduct tax. Use the current official guidance for the relevant payment rather than relying on an older example.
Summary: responsibilities on both sides
Withholding tax involves duties for both the payer and the recipient.
How the two roles fit together
- The payer determines whether withholding applies, deducts the amount, and remits it as required.
- The recipient requests Form 50 Bis, keeps the certificate, and uses it when filing an annual return.
Conclusion
Withholding tax is one part of the income-tax system. A payer may have to deduct and remit it, while a recipient may be able to claim the amount as a credit in the annual calculation. Rules differ by income type and can change. This is general information, not individualized tax or legal advice; confirm current guidance with the Thai Revenue Department or a qualified tax professional.
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