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 a business in Thailand; and
• Derives income or gains from Thailand sources.

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 a foreign company derives on the income or gains from Thailand sources.

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

Additionally, the domestic withholding tax law (Departmental Regulation Tor.Por. 4/2528) prescribes that when a payer (customer) in Thailand pays a PE, the payer (customer) shall withhold tax at the rate of 5% of payments made to the PE, (and both the 5% withholding tax and the payment made to a PE are recorded on the Revenue Department's domestic withholding tax system).

PE corporate tax payable in Thailand can therefore be:

• 20% of the PE's net profit (after deduction of expenses), which is the PE's duty to determine and pay tax on, under the Section 76 bis law; or
• 5% of the PE's gross income or gains (before deduction of expenses), as maybe assessed by a tax audit officer.

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, a representative, or a go-between in Thailand, and earning gains or income 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 a right to a period of time in Thailand without any PE deeming. Generally speaking, that period of time is 6 months for:

1. A building site, or a construction, installation or assembly project, or supervisory activities in connection therewith in Thailand; and/or
2. The furnishing of services including consultancy services in Thailand.​

Each particular Double Tax Treaty must be referred to for the relevant right to a period of time in Thailand without any deeming of a PE.

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