Withholding Tax (WHT) is one of those compliance areas that seems straightforward until you're sitting in front of a supplier invoice trying to figure out whether it applies, which rate to use, and exactly which amount to deduct from. Most of the confusion comes down to a handful of specific points: services versus products, pre-VAT versus total amount, and which form to file depending on who your supplier is.
This article covers domestic WHT only — payments to Thai individuals and Thai companies. WHT on payments to foreign suppliers will be covered separately.
The Principle
Withholding Tax is a mechanism for collecting income tax at the point of payment rather than waiting for the recipient to declare it at year end. When your company pays a supplier for services, you are legally required to deduct a percentage of that payment, remit it to the Revenue Department on the supplier's behalf, and issue a certificate confirming the deduction.
From the supplier's perspective, the WHT you deduct is not a final tax, it is a credit against their own personal income tax or corporate income tax liability at year end. From your perspective as the payer, it is a monthly compliance obligation: deduct it and file the appropriate tax return.
WHT Applies to Services, Not Products
The first and most common source of confusion: WHT applies to payments for services only, not to the purchase of goods. If you buy equipment, raw materials, or any physical product, no WHT is due regardless of the amount or who the supplier is.
The distinction becomes less obvious with mixed invoices: a supplier who installs equipment and charges for both the hardware and the installation labour. The correct approach is to apply WHT only to the service component, not the total invoice. If the invoice doesn't separate the two, it is worth asking your supplier to split it, or agreeing on a reasonable allocation.
The ฿1,000 threshold: WHT only applies to single payments above ฿1,000. A one-off payment of ฿900 for a small service does not trigger the obligation. The exception is recurring payments under long-term agreements for instance: telephone bills, internet subscriptions, or cleaning contracts where WHT applies even if each individual invoice is below ฿1,000.
The Amount to Deduct From: Pre-VAT Only
WHT is always calculated on the amount before VAT. A supplier invoices you ฿10,000 for services plus ฿700 VAT. The total invoice is ฿10,700. WHT at 3% is calculated on ฿10,000 — the pre-VAT amount — giving ฿300. It is not 3% of ฿10,700.
The VAT component passes through separately: you pay it to your supplier, who remits it to the Revenue Department via their monthly VAT return. WHT and VAT are two parallel systems, both calculated from the same pre-VAT base, but filed and remitted through entirely separate channels.
Rates by Payment Type
The applicable rate and appropriate tax form to file depend on what the payment is for and whether the recipient is an individual or a company. The table below covers the main domestic categories:
| Type of Payment | WHT Rate | Form to File |
|---|---|---|
| Professional services / hire of work | 3% | PND 3 / PND 53 |
| Rental of assets | 5% | PND 3 / PND 53 |
| Rental services | 3% | PND 3 / PND 53 |
| Advertising | 2% | PND 3 / PND 53 |
| Telephone and internet | 3% | PND 53 |
| Transportation | 1% | PND 3 / PND 53 |
| Non-life insurance (e.g. motor, health without PA) | 1% | PND 53 |
| Interest payments — paid to company | 1% | PND 53 |
| Interest payments — paid to individual | 15% | PND 2 |
| Royalties | 3% | PND 2 / PND 53 |
| Dividends | 10% | PND 2 / PND 53 |
| Salaries and wages | Progressive rate 0–35% | PND 1 |
A Concrete Example — Step by Step
Your company hires a Thai accounting firm (a registered company) for monthly bookkeeping services. Their invoice for October is:
- Service fee: ฿15,000
- VAT (7%): ฿1,050
- Total invoice: ฿16,050
Here is how the payment works:
- WHT base: ฿15,000 (the pre-VAT amount only)
- WHT rate: 3% (professional services, juristic person payee)
- WHT amount: ฿15,000 × 3% = ฿450
- Amount transferred to supplier: ฿16,050 − ฿450 = ฿15,600
- Amount remitted to Revenue Department: ฿450 (via PND 53, by the 15th of November)
Your supplier receives ฿15,600, not ฿16,050. The ฿450 you withheld goes to the Revenue Department as a prepayment of the supplier's corporate income tax. The supplier's tax return at year end will show ฿450 of WHT already paid, reducing their final tax bill accordingly, if any.
The WHT Certificate — Your Obligation as Payer
Every time you deduct WHT from a supplier payment, you are legally required to issue a Withholding Tax Certificate (in Thai: หนังสือรับรองการหักภาษี ณ ที่จ่าย). This is not optional but is a statutory obligation under the Revenue Code.
The certificate must be issued in duplicate: one copy for the supplier, one for your own records. It must state the payer's name and tax ID, the supplier's name and tax ID, the date of payment, the nature of the income, the pre-VAT amount, and the amount withheld.
The certificate must be delivered to the supplier at the time of payment or within a reasonable time thereafter. In practice, most companies issue it with the payment transfer confirmation or on the same day. Delaying it creates problems: the supplier needs the certificate to reconcile their books and to use the WHT credit on their own tax return.
Filing: Deadlines, Forms, and What Gets Filed
WHT returns are filed monthly, covering all deductions made during the previous calendar month. The deadline is the 7th of the following month for paper filing, or the 15th when filed online through the Revenue Department's e-filing system.
The form depends on the payee:
- PND 1: Salary and wage withholding from employees. Filed monthly; the annual summary (PND 1 Kor) is filed by end of February.
- PND 2: WHT deducted from royalty, interest, and dividend payments to individuals (income under Sections 40(3) and 40(4) of the Revenue Code).
- PND 3: WHT deducted from payments to individual vendors (freelancers, sole traders, individuals) for other types of income.
- PND 53: WHT deducted from payments to Thai companies and juristic persons.
If in a given month you have both individual and company suppliers, you file both PND 3 and PND 53. If you also make royalty, interest, or dividend payments to individuals, PND 2 is filed separately. All forms share the same deadline. The accompanying WHT certificates are filed alongside each return.
What Late Filing Costs
| Late filing scenario | Penalty |
|---|---|
| Within 7 days late | ฿100 flat |
| More than 7 days late | ฿200 flat |
| Monthly surcharge (on top of flat fine) | 1.5% per month on unpaid amount |
The flat fines are modest. The 1.5% monthly surcharge is what accumulates into a real cost on higher-value WHT amounts, though it is capped at the total amount of WHT owed, so the surcharge can never exceed 100% of the original tax.
Common Mistakes
- Deducting from the VAT-inclusive total. WHT is always calculated on the pre-VAT amount. Deducting 3% from ฿10,700 instead of ฿10,000 results in both an overcalculated deduction (which shortchanges the supplier) and a technically incorrect WHT filing.
- Applying WHT to product purchases. No WHT on goods. A mixed invoice covering both goods and services requires WHT only on the service component.
- Using the wrong form. PND 2 for royalties, interest, and dividends paid to individuals, PND 3 for other payments to individuals, PND 53 for companies. Getting the form wrong means the Revenue Department cannot match the payment to the correct taxpayer, and the supplier cannot use the WHT credit correctly.
- Not issuing the WHT certificate. The certificate is a legal requirement, not an administrative nicety. Suppliers need it to claim their WHT credit. Missing or delayed certificates are a common source of supplier friction.
- Ignoring the ฿1,000 threshold exception for recurring contracts. Monthly telephone and internet bills below ฿1,000 still attract WHT if they are billed under a long-term agreement. The threshold exemption only applies to one-off payments.
WHT is a monthly obligation that sits alongside your VAT return and payroll filings. When the process is set up correctly with the right base, right rate, right form, and the certificate issued on payment day, it runs cleanly.
Preparing and submitting WHT returns (PND 1, 2, 3 and 53) every month is part of our all-inclusive accounting plans.