When a Thai company pays a foreign provider for services, royalties or fees, it usually must withhold income tax and pay it on form PND.54 by the 7th of the next month. If the service is used in Thailand, it must also account for 7 % VAT itself on form PP.36, because the foreign supplier charges none.
Thailand taxes income that has its source in the country, whoever the recipient is. A foreign company that earns fees from a Thai customer has Thai-source income, and the Revenue Code makes the Thai payer responsible for collecting the tax before the money leaves. This is the withholding obligation, reported on PND.54.
Value added tax follows a different logic. A foreign supplier is not registered in Thailand and does not issue a Thai tax invoice, but the service is consumed here. The Code therefore shifts the VAT to the Thai recipient, who calculates and pays it on a separate monthly form, PP.36. The two duties are independent: a payment can be caught by one, the other or both.
Missing either one is a common finding in audits of companies that subscribe to foreign software, hire overseas consultants or pay for advertising platforms. Because the payment is small each month, the exposure builds quietly across years, together with the surcharges that accrue on each missed month.
PND.54 covers payments to foreign juristic persons of assessable income such as service fees, royalties, interest and certain other items. The rate depends on the type of income. For many service fees and royalties the domestic rate is 15 %, while dividends and interest have their own rates, and the payer withholds that percentage from the payment.
The return is due by the 7th of the month following the payment, and the Revenue Department normally allows extra days for online filing. The tax is paid with the return. The foreign recipient receives the net amount, so the contract should say whether the quoted price is gross or net of Thai tax, which is a negotiation point in itself.
A purely foreign purchase of goods, for instance buying equipment from an overseas manufacturer, generally does not trigger PND.54, because the profit from selling goods abroad is not Thai-source income. The classification depends on the facts, so ask before assuming that a payment is outside the net.
Thailand has double tax treaties with many countries, and some reduce or remove Thai tax on certain payments to residents of the treaty country. Relief usually depends on the recipient’s residence, on the nature of the income and on whether the recipient has a permanent establishment in Thailand.
Applying a treaty rate in practice means holding evidence. A certificate of tax residence from the provider’s tax authority, a signed declaration of beneficial ownership and a copy of the contract are the typical documents. Without them, the safe course is to withhold at the domestic rate and let the provider claim a credit or refund at home.
Treaty analysis is technical and mistakes cost real money. If a significant sum or a recurring payment is involved, ask a tax adviser to confirm the treaty position once, and record the conclusion on the supplier file.
PP.36 reports VAT on services supplied from abroad and used in Thailand. The Thai recipient calculates 7 % of the amount paid, files the form by the 7th of the following month and pays the tax. Where the recipient is VAT-registered and the service is used in its taxable business, the VAT paid can usually be claimed as input tax on the PP.30 for the same period, with the PP.36 payment receipt as evidence.
Businesses that are not VAT-registered cannot recover the tax, so for them the PP.36 is a real cost, and it should be included when budgeting for a foreign service. The base for VAT is the amount paid including any Thai withholding tax gross-up, which is another reason to decide in the contract whether prices are gross or net.
Some large foreign digital platforms are registered for VAT in Thailand and charge the tax on their invoices to Thai customers. In that case ask your accountant whether PP.36 is still needed, and keep the provider’s invoice showing Thai VAT as evidence.
For each foreign payment, keep the contract or order, the provider’s invoice, the proof of payment, the PND.54 and PP.36 filings with their receipts, the calculation of tax, and any treaty evidence. Name the folder by month so that an inspector can follow one payment through all the records.
Set up the routine before the first payment. When a new foreign vendor is approved, the finance team records the vendor’s country, the type of service, the gross or net pricing and the tax treatment decided with the accountant. At payment, the tax is calculated and the withheld amount is held back; at month-end, the forms are filed.
Review the foreign-vendor list every quarter. Subscriptions that began as trials and became permanent are the usual cause of missed filings.
Finally, agree who owns the process. When purchasing approves the vendor, finance applies the tax, and the accountant files, each handover is a place where a foreign payment can slip through. A single named owner who sees every overseas payment closes that gap and answers the auditor’s questions in one place.
4softerp can hold the ledger where your accountant records the payment, the withholding and the VAT, and 4invoices can archive your own sales invoices. 4softcrm can hold the contact record for an overseas provider if you also sell to them.
The ecosystem does not calculate PND.54 or PP.36, decide treaty relief, file the returns or connect to the Revenue Department. The calculation, the filing and the payment are done by you and your accountant.
Subscriptions to foreign software are paid by card every month without any tax review.
List every foreign recurring payment with its type of service and discuss the treatment with your accountant once. The system does not detect foreign payments or compute Thai tax on them.
The contract does not say whether the price is net of Thai tax, and the provider disputes the deduction.
Add a clause stating whether the price is gross or net of withholding tax and VAT before the first payment, and keep the signed contract on the supplier file.
Treaty relief is claimed without a residence certificate.
Ask the provider for a tax residence certificate and a declaration of beneficial ownership before you apply a lower rate, and file them with the return.
PND.54 is the monthly return for income tax withheld on payments to foreign juristic persons of Thai-source income such as service fees and royalties. It is due by the 7th of the month after the payment, and the tax is paid with the return. The foreign recipient receives the net amount after the deduction.
PP.36 is the monthly form by which a Thai recipient accounts for 7 % VAT on services supplied from abroad and used in Thailand. The Thai business calculates and pays the tax, and if it is VAT-registered it can usually claim the same amount as input tax on its PP.30 for the month.
Often yes, because payments for the use of software or for services can be Thai-source income of the foreign provider. Whether and at what rate depends on the nature of the payment and any treaty, so ask your accountant. Also check whether the provider already charges Thai VAT, which could change the PP.36 position.
Yes, many double tax treaties reduce or remove Thai tax on certain payments to residents of the treaty country. To rely on one you normally need the provider’s certificate of tax residence, a beneficial ownership declaration and the contract. Without those documents, withhold at the domestic rate and let the provider claim relief at home.
File the missing returns as soon as possible, with surcharges, and consult your accountant about voluntary disclosure. The Revenue Department can assess the unwithheld tax and unpaid VAT together with penalties, and the exposure grows with every month, so correcting early is nearly always cheaper than waiting for an inspection.
A multi-company ERP for your books and a PDF invoice archive. Returns are filed with the Revenue Department.
