Foreign withholding tax credit

FOREIGN TAX paid in a foreign country (“foreign tax paid”), which is paid by Thai Company who established under the laws of Thailand, can be used as a tax credit against with Thai corporate income tax according to the following Thai tax laws:

  1. Royal Decree No. 18 – foreign tax paid in a foreign country where has a double tax treaty with Thailand; and
  2. Royal Decree No. 300 – foreign tax paid in a foreign country where does not have a double tax treaty with Thailand.

Income is subject to foreign tax in foreign country, according to the Notification of Director-General No.65, the Thai company could select the following methods;

(a) recognize the withholding tax as an expense in corporate income tax calculation; or
(b) utilize such foreign withholding tax offset against corporate income tax in Thailand.

In case of (b) utilize as corporate income tax credit, the Thai company must have the following documents to support tax credit;

1. Receipt and withholding tax certificate from tax authorities in foreign country where foreign tax is paid;
2. Document no. 1. must be certified by a Thai embassy or consulate located in foreign country and it must be translated into Thai or English by using Thai numbers or Arabic numbers.  The document must contain at least the following items:
2.1 Name of taxpayer;
2.2 Income items and the date, month, year of receiving payment; and
2.3 The amount of tax already paid in India and date, month, year of paying tax

Note that the foreign withholding tax must be used for corporate income tax credit in the year that the Company recognizes such income, although it has not receive the payment yet. (refer to tax ruling Kor. Khor. 0702/8746, dated October 7, 2013).

For more information, or for a specific tax audit purpose, please contact Khun Worraparn Kaewseengam (M: 089-792-2227)