Withholding tax for companies: common rates and filing P.N.D.3 and P.N.D.53
Withholding tax is a duty a company deals with almost every month, whether it hires contractors, rents an office or pays for advertising. If tax is withheld at the wrong rate or not withheld at all, the payer may have to pay the tax itself, plus a surcharge. This article covers the points that come up most often in day-to-day work.
What is withholding tax?
Withholding tax means that the payer deducts part of a payment as tax when paying, then remits it to the Revenue Department on the payee's behalf. The payee uses the tax withheld as a credit when filing its own income tax return. It is therefore not an extra tax, but tax collected in advance.
Common rates when the payer is a company
| Type of income | Rate |
|---|---|
| Hire of work and service fees | 3% |
| Professional fees | 3% |
| Rent of property | 5% |
| Advertising fees | 2% |
| Transport (excluding public transport) | 1% |
| Prizes and discounts for sales promotion | 3% |
| Prizes from contests, competitions or lucky draws | 5% |
For hire of work and service fees, tax generally has to be withheld when a single payment is THB 1,000 or more. Rates and conditions may vary with the type of payee and the nature of the income, so check before paying whenever a new type of payment comes up.
Which return: P.N.D.3 or P.N.D.53?
- P.N.D.3 (ภ.ง.ด.3): the withholding tax return used when the payee is an individual, such as a freelancer or an individual landlord
- P.N.D.53 (ภ.ง.ด.53): the withholding tax return used when the payee is a juristic person, such as a company or a registered partnership
- P.N.D.1 (ภ.ง.ด.1): used for employees' salaries and wages
- P.N.D.54 (ภ.ง.ด.54): used when certain types of income are paid to a foreign juristic person that does not carry on business in Thailand
Filing and payment deadlines
The payer must file the return and pay the tax by the 7th of the month following the month of payment when filing on paper, with extra time for online filing as announced by the Revenue Department. In a month with no payments subject to withholding, there is no need to file P.N.D.3 or P.N.D.53.
The withholding tax certificate
Every time tax is withheld, the payer must issue a withholding tax certificate (commonly known as the 50 Tawi certificate) to the payee, showing the name, address and taxpayer identification number of both parties, the type of income, the amount paid and the tax withheld. The payee uses this document as evidence of its tax credit.
The e-Withholding Tax system
Under the e-Withholding Tax system, participating banks remit the withholding tax and the related data to the Revenue Department on the payer's behalf when payments are made through the bank. This reduces the work of filing returns and keeping documents, and at certain times the Revenue Department has offered reduced tax rates for payments made through the system, so check the conditions in force at the time.
Common mistakes
- Withholding at the wrong rate, such as applying the service rate to rent
- Forgetting to withhold, so that the payer bears the tax that was not withheld plus a surcharge
- Issuing certificates that are incomplete or show incorrect payee details
- Agreeing to bear the payee's tax without correctly calculating the tax borne on their behalf
Frequently asked questions
Do we need to withhold tax on a service fee below THB 1,000?
For hire of work and general service fees, there is no need to withhold if each payment is below THB 1,000, unless the payments are instalments under the same contract that together come to THB 1,000 or more. Look at the nature of the contract.
What if the tax was withheld but the return was filed late?
The payer must pay a surcharge for the period of the delay and may also face a fine. File the late return as soon as the problem is found.
Can the payee get the withheld tax back?
The payee credits the tax withheld when filing its annual income tax return. If the tax withheld is more than the tax actually due, the payee can claim a refund through the Revenue Department's procedure.
Let us help you manage withholding tax
Kerwin & Vance helps set up payment procedures and tax documents so that tax is withheld at the right rate, filed on time and ready for inspection. Find out more about our Tax services, or book a consultation with us.
This article provides general information only. Tax rates and deadlines may change with Revenue Department announcements, so check the latest information or consult a specialist before taking action.