Thailand Hire of Work Agreements Stamp Duty Tax
Hire of work agreements are the biggest stamp duty tax risk for companies in Thailand. In addition to being subject to 3% withholding tax and 7% VAT, they are also subject to 0.1% stamp duty tax.
What is a hire-of-work agreement?
Thailand's commercial business laws define a hire-of-work agreement as a contract under which one person (the contractor) agrees to perform work for another person (the employer) who agrees to pay remuneration to the contractor.
According to this definition, virtually any services agreement that is entered into in Thailand is a hire-of-work agreement. Even a contract for maintenance on office machines is a hire-of-work agreement.
Stamp duty tax for hire-of-work agreements
For hire-of-work contracts, the Thai stamp duty tax law prescribes:
If stamp duty tax is not paid by the due date, the amount of the stamp duty tax is increased by large late payment charges called "surcharges" as follows:
Thus, whilst stamp duty tax is only a 0.1% tax, if it is not paid, the tax cost can be as high as 7 times the amount that was due on the payment due date.
This Tax Insight is general information only. It should not be used to determine any particular matter without consulting with an experienced Thailand tax advisor.