Thailand Domestic Rent Payments Withholding Tax
Update | May 2016
On 10 May 2016, the Revenue Department issued Departmental Regulation No Taw Paw 259/2559, which repeals the 2009 amendment to the withholding tax law, and which from 1 June 2016 onward, subjects all domestic property rental payments to withholding tax.
Departmental Regulation No Taw Paw 259/2559 issued on 10 May 2016 repeals the 2009 amendment that exempted domestic withholding tax on rental of property payments to a 60 million Baht company under a 3 years or longer "lease agreement", and means, effective 1 June 2016 (the effective date prescribed in the Regulation), that 5% withholding tax applies irrespective of whether or not payment being made to a 60 million baht company under a 3 years or longer "lease agreement".
The summary of withholding tax rates for domestic hire of property rental payments in this Tax Insight Article has been updated for this change.
Update | July 2015
For two 60 million Baht companies, the Thailand Revenue Department's tax lawyers have issued Tax Ruling No Gor Kor 0702/2450 dated 17 Feb 2015 and Tax Ruling No Gor Khor 0702/3929 dated 7 Apr 2015, denying both companies their claims for exemption from the 5% withholding tax under Taw Paw 176/2552.
Both of the Rulings are that - as the companies' hire of property agreements were operating lease agreements and not finance lease agreements - then the exemption provided in Taw Paw 176/2552 does not apply - and therefore, their hire of property rental payments remain subject to 5% domestic withholding tax.
Those who are familiar with the International and Thai Accounting Standard, Accounting for Leases, would recognize that the Revenue Department's words of "a lease agreement that provides a right at the end of the lease term for a lessee to either purchase the property or return the property back to the lessor" mean a finance lease agreement and Regulation No Taw Paw 176/2552 therefore provides exemption from the 5% withholding tax only for 60 million Baht companies and only for rental payments under a finance lease agreement.
Tax Insight | October 2009
On 6 October 2009, the Director-General of Revenue issued Departmental Regulation No Taw Paw 176/2552, which provides an exemption from domestic withholding tax on rental of property payments made to a 60 million Baht company under a 3 years or longer "lease agreement".
Withholding Tax Rates
A summary of the withholding tax rates for domestic hire of property rental payments made from 6 October 2009 onward is as follows:
* A "lease agreement" is defined as an agreement, which provides a right at the end of the lease term for a lessee to either purchase the property or return the property to the lessor.
This is a general information Tax Advantage Insight Article only. It should not be used to determine any matter without consulting with an experienced Thailand tax advisor.