When a Thai company pays for services, rent, advertising or fees it normally withholds tax at source and pays it to the Revenue Department by the 7th of the next month using PND.3 for individuals or PND.53 for companies. The payer must also give the payee a 50 Tawi withholding certificate.
Withholding tax lets the Revenue Department collect income tax in advance from payments that are likely to be taxable income for the recipient. The payer deducts a percentage and remits it, and the recipient later credits the amount against its own tax. For a company that pays suppliers regularly, it is a monthly duty that runs in parallel with VAT.
The obligation falls on the payer. If the company fails to withhold, it can be held liable for the tax it should have deducted, plus surcharges, even though it never received that money. This is why the accounts payable team must know the rules before the payment run, not after it.
The payer also has to be registered as a withholding agent in practice, because it needs its tax ID and the ability to file the monthly forms. Employers who already file PND.1 for salaries have the same machinery in place.
The rate depends on the type of income. Typical examples are 3 % on general services and professional fees paid to companies, 5 % on rent, 2 % on advertising and 1 % on transport, with different rates for dividends, interest and royalties. Payments to individuals for services or commissions use the individual rules, which can differ from the corporate ones.
Not every payment is caught. Purchases of goods are generally outside the service withholding rules, and certain payments between registered companies fall under exceptions. The classification, however, is made by the nature of the payment and not by the label on the invoice, so a supplier who sends a “goods” invoice containing a services element may still trigger withholding.
Because rates and exemptions change by notification, confirm the current rate for each type of payment with your accountant or the Revenue Department before you pay, and put the rate on the supplier record so that the next payment is handled consistently.
PND.3 covers payments to individuals and PND.53 covers payments to companies and other juristic persons. Each is filed monthly, showing every payment made, the tax withheld and the recipient’s details. The deadline is the 7th of the following month, and the Revenue Department normally extends it by some days for online filing.
The tax withheld must be paid to the Revenue Department by the same deadline, even if the recipient is a company that will recover it later. A late payment attracts surcharges per month and cannot be netted against refunds due on other taxes without a formal request.
Prepare the summary from your payment records rather than your memory. A schedule that lists each payee, tax ID, payment date, gross amount, rate and tax withheld lets you file accurately and lets your accountant check the figures against the ledger.
Every withholding must be documented by a certificate called 50 Tawi, which states the payer, the payee, the date, the income type and the tax withheld. The recipient needs the certificate to claim a credit in its own income tax return, so a missing or wrong certificate quickly produces a call from the supplier.
Issue the certificate when the payment is made, in the correct number of copies, and keep your copy. For an annual overview of salary withholding, employers issue a similar certificate to each employee after the year ends. Assign one person to issue and file them, and number them consistently.
The certificate is the only evidence the recipient has of the tax already paid on its behalf, so errors in the payee’s tax ID or the income type must be corrected by issuing a new one.
You can keep the company’s books in 4softerp and use 4notify to send your own SMS or e-mail to a supplier, for example to ask for their tax ID before the payment date. Your accountant can use the ledger to build the PND.3 and PND.53 summaries.
The system does not assign income types to suppliers, calculate the tax to withhold, produce the monthly forms or the 50 Tawi certificates, or submit anything to the Revenue Department. Those steps are completed by you and your accountant.
Build the withholding step into the payment process rather than treating it as an afterthought. Before each payment, check the supplier file for tax ID, payee type and rate. After the payment, record the withheld amount and the form on which it will be reported. Before the 7th, tick every payment against the draft return.
Keep one person responsible for issuing the 50 Tawi certificates and another for reviewing the return, so that the person who prepared it is not the only one who checked it. In a small company the director can do the second step in a few minutes by comparing the return total with the withholding account in the ledger.
Where a supplier is based abroad, the rules differ and a separate return is used, which is covered on the page about payments to overseas providers in the cross-border cluster. Do not file those payments on PND.53.
Finally, remember that withholding is also a cash question. The tax withheld is not the company’s money, and it should sit in a clearly identified liability account until it is paid over.
If you discover an error after filing, correct it quickly. A voluntary amended return with the surcharge is almost always cheaper than waiting for the Revenue Department to find the omission in an inspection, and it shows good faith if the question is ever raised.
Tax is not withheld at payment, or at the wrong rate, leaving the company to bear it.
Check the income type and withholding rate with your accountant or the Revenue Department before each payment. The system does not assign income types to suppliers and does not warn you when tax must be withheld.
Monthly withholding summaries are compiled from paper.
Summarise the monthly withholding items by form from your own documents and file PND.3 or PND.53 with the Revenue Department. The system does not produce the reports by form or the 50 Tawi certificates.
The payment run goes out before the accountant has confirmed which suppliers need withholding.
Mark each supplier with the income type and rate agreed with your accountant before the payment date, and review the list at every payment run. The system does not flag suppliers automatically.
PND.3 is the monthly return for tax withheld from payments to individuals, such as freelancers and landlords who are persons. PND.53 is the equivalent return for payments to companies and other juristic persons. Both are due on the 7th of the following month, with a few extra days normally allowed for online filing.
Generally the service withholding rules do not apply to a plain purchase of goods, but the nature of the payment decides, not the label. If the supplier also performs installation, design or other services, part of the payment may be caught. Confirm the classification with your accountant before paying the first invoice.
Rent is generally subject to withholding at 5 %, but you should confirm the current rate and any exemption with the Revenue Department or your accountant, since the rules are set by notification and can change. Put the agreed rate and the lease details in the supplier file for consistent handling.
File a corrected return and pay the tax with the surcharge as soon as you discover the omission. The Revenue Department can hold the company liable for the unwithheld tax, so it is better to correct voluntarily than to wait for an inspection. Your accountant can calculate the surcharge for the period involved.
Ask for the supplier’s tax ID, address and, for a VAT-registered supplier, a proper tax invoice. You need the tax ID to complete the 50 Tawi certificate and the PND form. Collect these details when you onboard the supplier, so that the payment run is never delayed by missing information.
A financial ERP for your books. Remittance is made to the Revenue Department.
