Section 76 bis of the Revenue Code is Thailand's Permanent Establishment (PE) corporate tax law. It deems a PE in Thailand when a foreign company:

• Has an employee, a representative or a go-between in Thailand for the carrying on of business in Thailand; and
  
• Derives income or gains in Thailand.

PE Tax Payable in Thailand

The tax payable under the Section 76 bis law is the standard rate of corporate tax (20%) on the amount of the net profit (after deduction of expenses) that the foreign company derives from the income or gains in Thailand.

But the Section 76 bis law additionally prescribes that if the net profit is either not known or cannot be ascertained or tax audit officers don't accept expenses are directly related or incurred for earning the income or gains in Thailand the tax audit officers have the power to assess the tax at the rate of 5% of the gross income or gains in Thailand (before deduction of expenses).

And additionally, the domestic withholding tax law Departmental Regulation No. Tor.Por. 4/2528 prescribes that when a payer in Thailand (customer in Thailand) pays a foreign company's PE in Thailand, the payer (customer) shall withhold 5% tax from the payment made to the foreign company's PE.

The PE tax payable in Thailand can therefore be summed up as being:

• 20% of the PE's net profit (after deduction of directly related or directly incurred expenses); or
  
• 5% of the PE's gross income or gains (before deduction of expenses).

Rights and Entitlements under Double Tax Treaties

Thailand's Section 76 bis PE tax law does not grant any period of time before a foreign company can be deemed to have a PE and under Thailand's PE tax law foreign companies can be deemed to have a PE from the first day of having an employee, representative or go-between in Thailand.

But foreign companies that are residents of countries that have entered into a Double Tax Treaty with Thailand should note that their Double Tax Treaty with Thailand grants them an entitlement right to a period of time in Thailand with- out any deeming of a PE. Generally speaking, the period of time is 6 months in Thailand for a foreign company's:

1. Building site, construction project, installation project, assembly project or supervisory activities in connection therewith in Thailand; and/or
2. Furnishing of services including consultancy services in Thailand.​

Each particular Double Tax Treaty must be referred to for the specific period of time entitlement prescribed in each Double Tax Treaty.

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