When a business operates as a legal entity, directors and the accounting team must pay particular attention to withholding tax. The law requires a corporate payer to deduct a prescribed portion of payments and remit it to the Revenue Department.
This is an advance tax payment for the recipient, and the applicable withholding type depends on the income.
1. Withholding From Employee Salaries (ภ.ง.ด.1)
When the company employs staff and pays salaries, it must calculate withholding tax at the progressive personal-income tax rates. It must also deduct social-security contributions at 5 percent of wages, calculated on a maximum salary base of 15,000 baht, and remit them to the Social Security Office.
2. Payments to Individuals (ภ.ง.ด.3)
When the company pays a non-employee individual, for example rent, work-for-hire fees, or professional freelance services, it must prepare withholding tax under ภ.ง.ด.3, such as when hiring a freelancer for a specific assignment.
3. Payments to Other Legal Entities (ภ.ง.ด.53)
When a company transacts with another legal entity, such as paying a cleaning company for services or a property company for office rent, it must withhold tax and file ภ.ง.ด.53. This supports transparent and auditable financial records for both parties.
| Form | Recipient | Examples |
|---|---|---|
| ภ.ง.ด.1 | Company employees | Salary and wages |
| ภ.ง.ด.3 | Individuals (not employees) | Rent, work-for-hire, freelancers |
| ภ.ง.ด.53 | Legal entities | Services and rent from other companies |
4. Common Withholding Tax Rates
Common rates encountered in Thai business include:
| Income type | Common rate |
|---|---|
| Services and work-for-hire | 3% |
| Rent | 5% |
| Transport | 1% |
Note: these are common guide rates. The actual rate depends on the income and recipient under the Revenue Code; always check with your accounting firm or the Revenue Department.
5. Filing Deadlines and Channels
The business must remit withheld tax by the 7th of the following month for paper filing, or by the 15th of the following month through internet e-Filing.
The Revenue Department and financial institutions have developed e-WHT (Electronic Withholding Tax), allowing businesses to withhold and remit tax through the bank at the time of transfer, reducing paper documents and making records easier to verify.
| Remittance channel | Deadline (following month) |
|---|---|
| Paper filing | By the 7th |
| Online filing (e-Filing) | By the 15th |
Important: a legal entity must issue a withholding tax certificate (50 Tawi) to the recipient every time, for use as annual-tax evidence. Failing to withhold or remit on time can result in penalties and surcharges under the Revenue Code.
Using online accounting software connected to tax systems can make this work more accurate and substantially reduce tax risk.
Want withholding tax to be calculated and remitted correctly every month? View Maitrichit’s tax services or contact us for a consultation.